First Mid Bancshares, Inc.’s (NASDAQ:FMBH) investors are due to receive a payment of $0.24 per share on 30th of May. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.
We’ve discovered 1 warning sign about First Mid Bancshares. View them for free.
We aren’t too impressed by dividend yields unless they can be sustained over time.
First Mid Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on First Mid Bancshares’ last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next year, EPS is forecast to expand by 8.1%. If the dividend continues on this path, the future payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.
View our latest analysis for First Mid Bancshares
The company has a long dividend track record, but it doesn’t look great with cuts in the past. Since 2015, the dividend has gone from $0.58 total annually to $0.96. This means that it has been growing its distributions at 5.2% per annum over that time. A reasonable rate of dividend growth is good to see, but we’re wary that the dividend history is not as solid as we’d like, having been cut at least once.
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, First Mid Bancshares has only grown its earnings per share at 4.7% per annum over the past five years. 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.
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn’t translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
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. Taking the debate a bit further, we’ve identified 1 warning sign for First Mid Bancshares that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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