FNCB Bancorp (NASDAQ:FNCB) Will Pay A Larger Dividend Than Last Year At $0.09

FNCB Bancorp, Inc. (NASDAQ:FNCB) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of September to $0.09. This will take the annual payment to 4.5% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for FNCB Bancorp

FNCB Bancorp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

FNCB Bancorp has a good history of paying out dividends, with its current track record at 7 years. Past distributions do not necessarily guarantee future ones, but FNCB Bancorp's payout ratio of 29% is a good sign for current shareholders as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 18.0% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 31% by next year, which is in a pretty sustainable range.

FNCB Bancorp Doesn't Have A Long Payment History

FNCB Bancorp's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2015, the dividend has gone from $0.08 total annually to $0.36. This means that it has been growing its distributions at 24% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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. FNCB Bancorp has impressed us by growing EPS at 18% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like FNCB Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for FNCB Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.