First Community Bankshares (NASDAQ:FCBC) Is Paying Out A Dividend Of $0.29

First Community Bankshares, Inc. (NASDAQ:FCBC) has announced that it will pay a dividend of $0.29 per share on the 23rd of February. This means the dividend yield will be fairly typical at 3.2%.

View our latest analysis for First Community Bankshares

First Community Bankshares' Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, First Community Bankshares has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 43%, which means that First Community Bankshares would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 20.4% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 50% over the same time period, which is in a pretty comfortable range.

First Community Bankshares 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 $0.48 in 2014, and the most recent fiscal year payment was $1.16. This implies that the company grew its distributions at a yearly rate of about 9.2% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

First Community Bankshares May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 3.4% per annum over the last five years, which admittedly is a bit slow. Growth of 3.4% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

An additional note is that the company has been raising capital by issuing stock equal to 14% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

First Community Bankshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think First Community Bankshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for First Community Bankshares you should be aware of, and 1 of them is significant. Is First Community Bankshares 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.