FB Financial's (NYSE:FBK) Shareholders Will Receive A Bigger Dividend Than Last Year

FB Financial Corporation (NYSE:FBK) has announced that it will be increasing its dividend from last year's comparable payment on the 5th of September to $0.15. This takes the annual payment to 1.7% of the current stock price, which unfortunately is below what the industry is paying.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that FB Financial's stock price has increased by 34% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for FB Financial

FB Financial's Payment Expected To Have Solid Earnings Coverage

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

FB Financial has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Using data from its latest earnings report, FB Financial's payout ratio sits at 8.6%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share is forecast to fall by 11.3% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 25% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

FB Financial Doesn't Have A Long Payment History

FB Financial's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.24 in 2018 to the most recent total annual payment of $0.60. This means that it has been growing its distributions at 20% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

FB Financial May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 4.8% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, FB Financial could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On FB Financial's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. To that end, FB Financial has 2 warning signs (and 1 which is significant) we think you should know about. 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.