First Mid Bancshares (NASDAQ:FMBH) Has Affirmed Its Dividend Of $0.23

The board of First Mid Bancshares, Inc. (NASDAQ:FMBH) has announced that it will pay a dividend on the 1st of September, with investors receiving $0.23 per share. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.

Check out our latest analysis for First Mid Bancshares

First Mid Bancshares' Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, First Mid Bancshares has a long history of paying out a part of its earnings to shareholders. Based on First Mid Bancshares' last earnings report, the payout ratio is at a decent 25%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 5.1%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 29%, which would be comfortable for the company to continue in the future.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was $0.42 in 2013, and the most recent fiscal year payment was $0.92. This works out to be a compound annual growth rate (CAGR) of approximately 8.2% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that First Mid Bancshares has been growing its earnings per share at 8.9% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for First Mid Bancshares' prospects of growing its dividend payments in the future.

First Mid Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think First Mid Bancshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for First Mid Bancshares that you should be aware of before investing. Is First Mid Bancshares not quite the opportunity you were looking for? Why not check out our selection of top 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.