First Community Corporation’s (NASDAQ:FCCO) investors are due to receive a payment of $0.15 per share on 18th of February. This payment means the dividend yield will be 2.3%, which is below the average for the industry.
See our latest analysis for First Community
First Community’s Earnings Will Easily Cover The Distributions
While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible.
First Community has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but First Community’s payout ratio of 32% is a good sign as this means that earnings decently cover dividends.
Looking forward, EPS is forecast to rise by 60.2% over the next 3 years. Analysts estimate the future payout ratio will be 25% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
First Community Has A Solid Track Record
Even over a long history of paying dividends, the company’s distributions have been remarkably stable. Since 2015, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
First Community May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Earnings per share has been crawling upwards at 4.6% per year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
We Really Like First Community’s Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in First Community in our latest insider ownership analysis. 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.
