First Bancorp (NASDAQ:FNLC) Has Announced That It Will Be Increasing Its Dividend To $0.36

The board of The First Bancorp, Inc. (NASDAQ:FNLC) has announced that the dividend on 19th of July will be increased to $0.36, which will be 2.9% higher than last year's payment of $0.35 which covered the same period. This will take the annual payment to 5.7% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for First Bancorp

First Bancorp's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

First Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but First Bancorp's payout ratio of 56% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 2.0% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

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First Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.78, compared to the most recent full-year payment of $1.40. This means that it has been growing its distributions at 6.0% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.0% per annum over the last five years, which admittedly is a bit slow. Growth of 2.0% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This could mean the dividend doesn't have the growth potential we look for going into the future.

We Really Like First Bancorp's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in First Bancorp stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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