Why You Might Be Interested In The First Bancorp, Inc. (NASDAQ:FNLC) For Its Upcoming Dividend

The First Bancorp, Inc. (NASDAQ:FNLC) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 8th of April in order to receive the dividend, which the company will pay on the 20th of April.

First Bancorp's next dividend payment will be US$0.30 per share, and in the last 12 months, the company paid a total of US$1.20 per share. Calculating the last year's worth of payments shows that First Bancorp has a trailing yield of 5.6% on the current share price of $21.39. If you buy this business for its dividend, you should have an idea of whether First Bancorp's dividend is reliable and sustainable. So we need to investigate whether First Bancorp can afford its dividend, and if the dividend could grow.

See 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 more than half (50%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit First Bancorp paid out over the last 12 months.

NasdaqGS:FNLC Historical Dividend Yield April 3rd 2020
NasdaqGS:FNLC Historical Dividend Yield April 3rd 2020

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 11% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. First Bancorp has delivered 4.4% dividend growth per year on average over the past ten years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

To Sum It Up

Should investors buy First Bancorp for the upcoming dividend? First Bancorp has an acceptable payout ratio and its earnings per share have been improving at a decent rate. First Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

On that note, you'll want to research what risks First Bancorp is facing. In terms of investment risks, we've identified 1 warning sign with First Bancorp and understanding them should be part of your investment process.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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