1st Source (NASDAQ:SRCE) Has Announced That It Will Be Increasing Its Dividend To $0.34

1st Source Corporation (NASDAQ:SRCE) will increase its dividend on the 15th of November to $0.34, which is 6.3% higher than last year's payment from the same period of $0.32. Although the dividend is now higher, the yield is only 2.9%, which is below the industry average.

See our latest analysis for 1st Source

1st Source's Payment Expected To Have Solid Earnings Coverage

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

1st Source has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 6.2% also shows that 1st Source is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to fall by 34.3%. However, as estimated by analysts, the future payout ratio could be 34% over the same time period, which we think the company can easily maintain.

1st Source Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.618 in 2013, and the most recent fiscal year payment was $1.28. This works out to be a compound annual growth rate (CAGR) of approximately 7.5% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. 1st Source has seen EPS rising for the last five years, at 11% per annum. 1st Source definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

1st Source Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that 1st Source is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. As an example, we've identified 1 warning sign for 1st Source 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.