Farmers National Banc's (NASDAQ:FMNB) Dividend Will Be $0.17

The board of Farmers National Banc Corp. (NASDAQ:FMNB) has announced that it will pay a dividend of $0.17 per share on the 29th of March. Based on this payment, the dividend yield on the company's stock will be 5.1%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Farmers National Banc

Farmers National Banc's Earnings Will Easily Cover The Distributions

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

Having distributed dividends for at least 10 years, Farmers National Banc has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Farmers National Banc's payout ratio of 51% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 1.1%. Despite that, analysts estimate the future payout ratio could be 52% over the same time period, which is in a pretty comfortable range.

Farmers National Banc Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $0.12 total annually to $0.68. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 2.5% per year. Growth of 2.5% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

An additional note is that the company has been raising capital by issuing stock equal to 10% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Farmers National Banc Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Farmers National Banc might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. Case in point: We've spotted 2 warning signs for Farmers National Banc (of which 1 doesn't sit too well with us!) you should know about. Is Farmers National Banc 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.