First Capital (NASDAQ:FCAP) Is Paying Out A Dividend Of $0.26

The board of First Capital, Inc. (NASDAQ:FCAP) has announced that it will pay a dividend on the 30th of December, with investors receiving $0.26 per share. This makes the dividend yield 4.3%, which will augment investor returns quite nicely.

Check out our latest analysis for First Capital

First Capital's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

First Capital has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 31%, which means that First Capital would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 7.8% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

First Capital Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.76 in 2012, and the most recent fiscal year payment was $1.04. This works out to be a compound annual growth rate (CAGR) of approximately 3.2% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Capital has seen EPS rising for the last five years, at 7.8% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for First Capital's prospects of growing its dividend payments in the future.

First Capital Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think First Capital might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 Capital that you should be aware of before investing. Is First Capital not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.