Investors who want to cash in on Farmers National Banc Corp’s (NASDAQ:FMNB) upcoming dividend of $0.06 per share have only 2 days left to buy the shares before its ex-dividend date, 07 December 2017, in time for dividends payable on the 29 December 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding FMNB can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Farmers National Banc
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does Farmers National Banc fit our criteria?
Farmers National Banc has a payout ratio of 23.98%, which means that the dividend is covered by earnings. Going forward, analysts expect FMNB’s payout to remain around the same level at 24.97% of its earnings, which leads to a dividend yield of around 1.64%. In addition to this, EPS should increase to $0.96. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Farmers National Banc fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. Relative to peers, Farmers National Banc produces a yield of 1.60%, which is on the low-side for banks stocks.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in FMNB right now, in terms of its dividend attributes. It may be valuable exploring other dividend stocks as alternatives to FMNB or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? After digging a little deeper into FMNB’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, FMNB could still be offering some interesting investment opportunities. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Take a look at our latest free fundmental analysis to explore other aspects of FMNB.
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.