First Internet Bancorp (NASDAQ:INBK) Is Paying Out A Dividend Of $0.06

First Internet Bancorp's (NASDAQ:INBK) investors are due to receive a payment of $0.06 per share on 17th of July. Including this payment, the dividend yield on the stock will be 1.6%, which is a modest boost for shareholders' returns.

See our latest analysis for First Internet Bancorp

First Internet Bancorp's Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

First Internet Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, First Internet Bancorp's latest earnings report puts its payout ratio at 11%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to rise by 0.03% over the next year. If the dividend continues on this path, the future payout ratio could be 10% by next year, which we think can be pretty sustainable going forward.

First Internet Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.16, compared to the most recent full-year payment of $0.24. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Unfortunately, First Internet Bancorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On First Internet Bancorp's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for First Internet Bancorp (1 doesn't sit too well with us!) that you should be aware of before investing. Is First Internet Bancorp 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.