1st Source's (NASDAQ:SRCE) Dividend Will Be Increased To $0.40

1st Source Corporation's (NASDAQ:SRCE) dividend will be increasing from last year's payment of the same period to $0.40 on 14th of November. Even though the dividend went up, the yield is still quite low at only 2.5%.

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1st Source's Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

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 6.0% also shows that 1st Source is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to expand by 9.2%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for 1st Source

1st Source Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from $0.655 total annually to $1.52. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

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. We are encouraged to see that 1st Source has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for 1st Source's prospects of growing its dividend payments in the future.

1st Source Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 1st Source analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is 1st Source 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.