Stock Analysis

Why You Might Be Interested In FNCB Bancorp, Inc. (NASDAQ:FNCB) For Its Upcoming Dividend

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NasdaqCM:FNCB
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Readers hoping to buy FNCB Bancorp, Inc. (NASDAQ:FNCB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase FNCB Bancorp's shares before the 30th of November in order to receive the dividend, which the company will pay on the 15th of December.

The company's upcoming dividend is US$0.09 a share, following on from the last 12 months, when the company distributed a total of US$0.36 per share to shareholders. Looking at the last 12 months of distributions, FNCB Bancorp has a trailing yield of approximately 4.5% on its current stock price of $8. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether FNCB Bancorp has been able to grow its dividends, or if the dividend might be cut.

Check out the opportunities and risks within the US Banks industry.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately FNCB Bancorp's payout ratio is modest, at just 32% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit FNCB Bancorp paid out over the last 12 months.

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NasdaqCM:FNCB Historic Dividend November 27th 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see FNCB Bancorp has grown its earnings rapidly, up 21% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. FNCB Bancorp has delivered an average of 24% per year annual increase in its dividend, based on the past seven years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is FNCB Bancorp worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, FNCB Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks FNCB Bancorp is facing. For example, we've found 1 warning sign for FNCB Bancorp that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether FNCB Bancorp is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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