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First Bancorp (NASDAQ:FBNC) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, First Bancorp investors that purchase the stock on or after the 29th of September will not receive the dividend, which will be paid on the 25th of October.
The company's next dividend payment will be US$0.22 per share, and in the last 12 months, the company paid a total of US$0.88 per share. Last year's total dividend payments show that First Bancorp has a trailing yield of 2.3% on the current share price of $38.22. If you buy this business for its dividend, you should have an idea of whether First Bancorp's dividend is reliable and sustainable. As a result, readers should always check whether First Bancorp has been able to grow its dividends, or if the dividend might be cut.
Check out 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 a comfortable 26% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, First Bancorp's earnings per share have been growing at 17% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, First Bancorp has increased its dividend at approximately 11% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Has First Bancorp got what it takes to maintain its dividend payments? Companies like First Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, First Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.