Primis Financial (NASDAQ:FRST) Has Announced A Dividend Of $0.10

Primis Financial Corp. (NASDAQ:FRST) will pay a dividend of $0.10 on the 24th of February. This means that the annual payment will be 3.4% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Primis Financial

Primis Financial's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Having distributed dividends for at least 10 years, Primis Financial has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Primis Financial's payout ratio of 55% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 127.0% over the next 3 years. Analysts estimate the future payout ratio will be 28% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $0.06 in 2013, and the most recent fiscal year payment was $0.40. This works out to be a compound annual growth rate (CAGR) of approximately 21% a year over that time. Primis Financial has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Primis Financial has been growing its earnings per share at 40% a year over the past five years. Primis Financial is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Primis Financial Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Primis Financial 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Primis Financial that investors should know about before committing capital to this stock. Is Primis Financial 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.