Stock Analysis
First Bancorp (NASDAQ:FBNC) will pay a dividend of $0.22 on the 25th of April. This means the annual payment will be 2.5% of the current stock price, which is lower than the industry average.
Check out our latest analysis for First Bancorp
First Bancorp's Payment Expected To Have Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive.
Having distributed dividends for at least 10 years, First Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, First Bancorp's payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to expand by 1.2%. Analysts estimate the future payout ratio will be 23% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
First Bancorp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.32 in 2013, and the most recent fiscal year payment was $0.88. This means that it has been growing its distributions at 11% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Bancorp has seen EPS rising for the last five years, at 14% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for First Bancorp's prospects of growing its dividend payments in the future.
We should note that First Bancorp has issued stock equal to 15% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
First Bancorp Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for First Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
What are the risks and opportunities for First Bancorp?
First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses.
Rewards
Trading at 52.4% below our estimate of its fair value
Earnings are forecast to grow 7.53% per year
Earnings grew by 53.6% over the past year
Risks
Shareholders have been diluted in the past year
Further research on
First Bancorp
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NasdaqGS:FBNC
First Bancorp
First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses.
Flawless balance sheet, undervalued and pays a dividend.
