Stock Analysis
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- NasdaqGM:FGBI
First Guaranty Bancshares, Inc. (NASDAQ:FGBI) Passed Our Checks, And It's About To Pay A US$0.16 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see First Guaranty Bancshares, Inc. (NASDAQ:FGBI) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, First Guaranty Bancshares investors that purchase the stock on or after the 23rd of March will not receive the dividend, which will be paid on the 31st of March.
The company's next dividend payment will be US$0.16 per share. Last year, in total, the company distributed US$0.64 to shareholders. Last year's total dividend payments show that First Guaranty Bancshares has a trailing yield of 3.8% on the current share price of $16.76. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for First Guaranty Bancshares
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. First Guaranty Bancshares paid out a comfortable 26% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, First Guaranty Bancshares's earnings per share have been growing at 18% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, First Guaranty Bancshares has increased its dividend at approximately 3.9% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Should investors buy First Guaranty Bancshares for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. First Guaranty Bancshares ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 1 warning sign for First Guaranty Bancshares you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
What are the risks and opportunities for First Guaranty Bancshares?
First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services in Louisiana and Texas.
Rewards
Trading at 49.5% below our estimate of its fair value
Revenue is forecast to grow 7.33% per year
Earnings have grown 20.1% per year over the past 5 years
Risks
Earnings are forecast to decline by an average of 8.1% per year for the next 3 years
Further research on
First Guaranty Bancshares
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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 NasdaqGM:FGBI
First Guaranty Bancshares
First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services in Louisiana and Texas.
Very undervalued with flawless balance sheet and pays a dividend.
