FNCB Bancorp, Inc.'s (NASDAQ:FNCB) investors are due to receive a payment of $0.09 per share on 15th of September. This means the annual payment is 5.6% of the current stock price, which is above the average for the industry.
Check out our latest analysis for FNCB Bancorp
FNCB Bancorp's Earnings Will Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
FNCB Bancorp has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Based on FNCB Bancorp's last earnings report, the payout ratio is at a decent 36%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next year, EPS could expand by 24.2% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.
FNCB Bancorp Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 7 years was $0.08 in 2016, and the most recent fiscal year payment was $0.36. This works out to be a compound annual growth rate (CAGR) of approximately 24% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. FNCB Bancorp has impressed us by growing EPS at 24% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
FNCB Bancorp Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for FNCB Bancorp that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.