First Bank (NASDAQ:FRBA) Is Due To Pay A Dividend Of $0.06

First Bank (NASDAQ:FRBA) has announced that it will pay a dividend of $0.06 per share on the 24th of May. The dividend yield is 2.0% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for First Bank

First Bank's Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

First Bank has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 21% also shows that First Bank is able to comfortably pay dividends.

Over the next year, EPS is forecast to expand by 22.4%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 22% by next year, which is in a pretty sustainable range.

historic-dividend

First Bank Is Still Building Its Track Record

First Bank'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. Since 2017, the annual payment back then was $0.08, compared to the most recent full-year payment of $0.24. This means that it has been growing its distributions at 17% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. First Bank hasn't seen much change in its earnings per share over the last five years. While growth may be thin on the ground, First Bank could always pay out a higher proportion of earnings to increase shareholder returns.

We should note that First Bank has issued stock equal to 28% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Our Thoughts On First Bank's Dividend

Overall, a consistent dividend is a good thing, and we think that First Bank has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 4 warning signs for First Bank that investors should know about before committing capital to this stock. Is First Bank 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.