First Guaranty Bancshares (NASDAQ:FGBI) Will Pay A Dividend Of $0.16

The board of First Guaranty Bancshares, Inc. (NASDAQ:FGBI) has announced that it will pay a dividend of $0.16 per share on the 29th of December. This makes the dividend yield 6.3%, which will augment investor returns quite nicely.

View our latest analysis for First Guaranty Bancshares

First Guaranty Bancshares' 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 Guaranty Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Guaranty Bancshares' payout ratio of 65% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 16.0%. Fortunately, the future payout ratio could reach 92% in the same 3 years as estimated by analysts, which is on the higher side, but certainly still feasible.

First Guaranty Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.437, compared to the most recent full-year payment of $0.64. This means that it has been growing its distributions at 3.9% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though First Guaranty Bancshares' EPS has declined at around 6.7% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Our Thoughts On First Guaranty Bancshares' Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments First Guaranty Bancshares has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Just as an example, we've come across 4 warning signs for First Guaranty Bancshares you should be aware of, and 1 of them shouldn't be ignored. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.