Is It Smart To Buy The First of Long Island Corporation (NASDAQ:FLIC) Before It Goes Ex-Dividend?

By
Simply Wall St
Published
March 04, 2021
NasdaqCM:FLIC

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that The First of Long Island Corporation (NASDAQ:FLIC) is about to go ex-dividend in just 4 days. If you purchase the stock on or after the 9th of March, you won't be eligible to receive this dividend, when it is paid on the 19th of March.

First of Long Island's next dividend payment will be US$0.19 per share, on the back of last year when the company paid a total of US$0.76 to shareholders. Looking at the last 12 months of distributions, First of Long Island has a trailing yield of approximately 3.9% on its current stock price of $19.45. If you buy this business for its dividend, you should have an idea of whether First of Long Island's dividend is reliable and sustainable. So we need to investigate whether First of Long Island can afford its dividend, and if the dividend could grow.

View our latest analysis for First of Long Island

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. Fortunately First of Long Island's payout ratio is modest, at just 43% of profit.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NasdaqCM:FLIC Historic Dividend March 4th 2021

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at First of Long Island, with earnings per share up 7.0% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. First of Long Island has delivered an average of 7.9% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Is First of Long Island an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating First of Long Island more closely.

On that note, you'll want to research what risks First of Long Island is facing. Our analysis shows 1 warning sign for First of Long Island and you should be aware of this before buying any shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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