First Guaranty Bancshares (NASDAQ:FGBI) Is Due To Pay A Dividend Of $0.16

The board of First Guaranty Bancshares, Inc. (NASDAQ:FGBI) has announced that it will pay a dividend on the 30th of December, with investors receiving $0.16 per share. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.

Our analysis indicates that FGBI is potentially undervalued!

First Guaranty Bancshares' 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.

First Guaranty Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, First Guaranty Bancshares' payout ratio sits at 23%, an extremely comfortable number that shows that it can pay its dividend.

EPS is set to fall by 18.8% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 30% over the same time period, which is in a pretty comfortable range.

First Guaranty Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.437 in 2012 to the most recent total annual payment of $0.64. This means that it has been growing its distributions at 3.9% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

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 Guaranty Bancshares has seen EPS rising for the last five years, at 18% per annum. First Guaranty Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

First Guaranty Bancshares Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for First Guaranty Bancshares (1 is a bit concerning!) 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.

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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.