Nasdaq
華爾街日報First Internet Bancorp (NASDAQ:INBK) Will Pay A Dividend Of $0.06
The board of First Internet Bancorp (NASDAQ:INBK) has announced that it will pay a dividend on the 15th of January, with investors receiving $0.06 per share. This means the annual payment will be 1.1% of the current stock price, which is lower than the industry average.
First Internet Bancorp's Earnings Will Easily Cover The Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having distributed dividends for at least 10 years, First Internet Bancorp has a long history of paying out a part of its earnings to shareholders. Despite this history however, the company's latest earnings report actually shows that it didn't have enough earnings to cover its dividends. This is an alarming sign for the sustainability of its dividends, as it may mean that First Internet Bancorpis pulling cash from elsewhere to keep its shareholders happy.
According to analysts, EPS should be several times higher in the next 3 years. They also estimate that the future payout ratio will be 4.9% in the same time horizon, so there isn't too much pressure on the dividend.
Check out our latest analysis for First Internet Bancorp
First Internet Bancorp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The payments haven't really changed that much since 10 years ago. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Dividend Growth Potential Is Shaky
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though First Internet Bancorp's EPS has declined at around 26% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about First Internet Bancorp's payments, as there could be some issues with sustaining them into the future. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Given that earnings are not growing, the dividend does not look nearly so attractive. Businesses can change though, and we think it would make sense to see what analysts are forecasting for the company. Is First Internet Bancorp 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.