On the 02 April 2018, Financial Institutions Inc (NASDAQ:FISI) will be paying shareholders an upcoming dividend amount of $0.24 per share. However, investors must have bought the company’s stock before 14 March 2018 in order to qualify for the payment. That means you have only 6 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Financial Institutions can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Financial Institutions

How I analyze a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Financial Institutions fare?

The company currently pays out 39.88% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 34.91%, leading to a dividend yield of around 2.84%. However, EPS should increase to $2.4, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Financial Institutions produces a yield of 3.01%, which is on the low-side for Banks stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Financial Institutions is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for FISI’s future growth? Take a look at our free research report of analyst consensus for FISI’s outlook.

2. Valuation: What is FISI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FISI is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.