Is It Smart To Buy The First Bancorp, Inc. (NASDAQ:FNLC) Before It Goes Ex-Dividend?

Simply Wall St
·3 min read

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The First Bancorp, Inc. (NASDAQ:FNLC) is about to trade ex-dividend in the next three days. You will need to purchase shares before the 5th of October to receive the dividend, which will be paid on the 16th of October.

First Bancorp's next dividend payment will be US$0.31 per share. Last year, in total, the company distributed US$1.24 to shareholders. Based on the last year's worth of payments, First Bancorp has a trailing yield of 5.9% on the current stock price of $21.08. If you buy this business for its dividend, you should have an idea of whether First Bancorp's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for First Bancorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. First Bancorp paid out 50% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit First Bancorp paid out over the last 12 months.

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historic-dividend

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, First Bancorp's earnings per share have been growing at 12% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. First Bancorp has delivered 4.7% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because First Bancorp is keeping back more of its profits to grow the business.

Final Takeaway

From a dividend perspective, should investors buy or avoid First Bancorp? Earnings per share are growing nicely, and First Bancorp is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, First Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Keen to explore more data on First Bancorp's financial performance? Check out our visualisation of its historical revenue and earnings growth.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

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