Fidelity D&D Bancorp (NASDAQ:FDBC) raises its dividend to $0.36
The advice of Fidelity D&D Bancorp, Inc. (NASDAQ: FDBC) announced that the December 9 dividend will be increased to $0.36, 9.1% higher than last year’s $0.33 payout that covered the same period. This brings the annual payout to 3.0% of the current share price, which is within the industry average.
Check out our latest analysis for Fidelity D&D Bancorp
Fidelity D&D Bancorp dividend should be well covered by earnings
We’re not too impressed with dividend yields unless they can be sustained over time.
Having distributed dividends for at least 10 years, Fidelity D&D Bancorp has a long history of returning a portion of its profits to shareholders. Based on Fidelity D&D Bancorp’s latest earnings report, the payout ratio is 26%, meaning the company is able to pay out its dividend with some wiggle room.
If the trend of recent years continues, EPS will increase by 17.3% over the next 12 months. Assuming the dividend continues on recent trends, we think the future payout ratio could be 25% by next year, which is in a fairly sustainable range.
Fidelity D&D Bancorp has a strong track record
The company has a long history of paying stable dividends. The dividend has gone from an annual total of $0.667 in 2012 to the most recent total annual payment of $1.32. This means that it increased its distributions by 7.1% per year during this period. The dividend has increased very well for several years and has provided its shareholders with good income in their portfolios.
The dividend should increase
Investors who have held shares of the company for the past few years will be pleased with the dividend income they have received. It is encouraging to see that Fidelity D&D Bancorp has grown its earnings per share by 17% per year over the past five years. EPS growth bodes well for the dividend, as does the low payout ratio the company is currently reporting.
Fidelity D&D Bancorp looks like a great dividend stock
Overall, we think it could be an attractive income stock, and it’s only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it’s good to see that income translate into cash flow. Considering all of this, it looks like a good dividend opportunity.
Investors generally tend to favor companies with a consistent and stable dividend policy as opposed to those with an irregular one. At the same time, there are other factors that our readers should be aware of before investing capital in a stock. For example, we chose 1 warning sign for Fidelity D&D Bancorp that investors should consider. Looking for more high yield dividend ideas? Try our collection of strong dividend payers.
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