First Bank (NASDAQ:FRBA) Is Due To Pay A Dividend Of $0.06

First Bank (NASDAQ:FRBA) will pay a dividend of $0.06 on the 24th of February. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

View our latest analysis for First Bank

First Bank's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

First Bank has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, First Bank's latest earnings report puts its payout ratio at 13%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 37.8%. Analysts estimate the future payout ratio will be 11% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

First Bank Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. Since 2017, the dividend has gone from $0.08 total annually to $0.24. This means that it has been growing its distributions at 20% per annum over that time. First Bank has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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. First Bank has impressed us by growing EPS at 31% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like First Bank's Dividend

Overall, we like to see the dividend staying consistent, and we think First Bank might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. As an example, we've identified 1 warning sign for First Bank that you should be aware of before investing. 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.