First Interstate BancSystem's (NASDAQ:FIBK) Dividend Will Be $0.47

First Interstate BancSystem, Inc. (NASDAQ:FIBK) will pay a dividend of $0.47 on the 15th of August. The dividend yield will be 6.0% based on this payment which is still above the industry average.

View our latest analysis for First Interstate BancSystem

First Interstate BancSystem's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

First Interstate BancSystem 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 Interstate BancSystem's payout ratio of 77% is a good sign as this means that earnings decently cover dividends.

Earnings per share is forecast to rise by 4.4% over the next year. If recent patterns in the dividend continues, the future payout ratio in 12 months could be 83% which is a bit high but can definitely be sustainable.

First Interstate BancSystem Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.56 in 2014 to the most recent total annual payment of $1.88. This means that it has been growing its distributions at 13% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Although it's important to note that First Interstate BancSystem's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for First Interstate BancSystem 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com