Fidelity D & D Bancorp's (NASDAQ:FDBC) Upcoming Dividend Will Be Larger Than Last Year's

Fidelity D & D Bancorp, Inc.'s (NASDAQ:FDBC) periodic dividend will be increasing on the 8th of December to $0.38, with investors receiving 5.6% more than last year's $0.36. This takes the annual payment to 3.2% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for Fidelity D & D Bancorp

Fidelity D & D Bancorp's Payment Expected To Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Fidelity D & D Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Fidelity D & D Bancorp's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 12.7% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Fidelity D & D Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the dividend has gone from $0.667 total annually to $1.44. This implies that the company grew its distributions at a yearly rate of about 8.0% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Fidelity D & D Bancorp has seen EPS rising for the last five years, at 13% per annum. Fidelity D & D Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Fidelity D & D Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Fidelity D & D Bancorp management tenure, salary, and performance. If you are a dividend investor, you might also want to look at our curated list of high yield 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.