First Internet Bancorp (NASDAQ:INBK) will pay a dividend of $0.06 on the 15th of April. This payment means the dividend yield will be 0.9%, which is below the average for the industry.
While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible.
First Internet Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don’t necessarily translate into future results, the company’s payout ratio of 8.3% also shows that First Internet Bancorp is able to comfortably pay dividends.
The next 3 years are set to see EPS grow by 104.9%. Analysts forecast the future payout ratio could be 4.7% over the same time horizon, which is a number we think the company can maintain.
View our latest analysis for First Internet Bancorp
The company has an extended history of paying stable dividends. The last annual payment of $0.24 was flat on the annual payment from10 years ago. Although we can’t deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Earnings have grown at around 2.9% a year for the past five years, which isn’t massive but still better than seeing them shrink. While growth may be thin on the ground, First Internet Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.
Overall, we like to see the dividend staying consistent, and we think First Internet Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 First Internet Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
