First Busey's (NASDAQ:BUSE) Dividend Will Be $0.24

editorial-team@simplywallst.com (Simply Wall St)

Sat, Oct 14, 2023, 6:04 AM 3 min read

First Busey's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, First Busey has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Busey's payout ratio of 38% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 13.6%. However, as estimated by analysts, the future payout ratio could be 49% over the same time period, which we think the company can easily maintain.

historic-dividend — NasdaqGS:BUSE Historic Dividend October 14th 2023

First Busey Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.48 in 2013 to the most recent total annual payment of $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

We Could See First Busey's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Busey has impressed us by growing EPS at 8.7% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

First Busey 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. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 First Busey that you should be aware of before investing. Is First Busey not quite the opportunity you were looking for? Why not check out our selection of top 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.