Farmers National Banc's (NASDAQ:FMNB) Upcoming Dividend Will Be Larger Than Last Year's

Farmers National Banc Corp. (NASDAQ:FMNB) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of March to $0.17. This takes the dividend yield to 4.7%, which shareholders will be pleased with.

See our latest analysis for Farmers National Banc

Farmers National Banc's Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Farmers National Banc has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 36%, which means that Farmers National Banc would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to fall by 10.3% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 42% over the same time period, which we think the company can easily maintain.

Farmers National Banc Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.12 in 2013 to the most recent total annual payment of $0.68. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year 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.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Farmers National Banc has seen EPS rising for the last five years, at 17% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Farmers National Banc Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for Farmers National Banc for free with public analyst estimates for the company. 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.