Advertisement

First United Corporation (NASDAQ:FUNC) Passed Our Checks, And It's About To Pay A US$0.13 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see First United Corporation (NASDAQ:FUNC) is about to trade ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 15th of October will not receive this dividend, which will be paid on the 2nd of November.

First United's next dividend payment will be US$0.13 per share, on the back of last year when the company paid a total of US$0.52 to shareholders. Based on the last year's worth of payments, First United has a trailing yield of 4.1% on the current stock price of $12.57. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether First United has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for First United

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see First United paying out a modest 31% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit First United paid out over the last 12 months.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see First United has grown its earnings rapidly, up 28% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. First United has delivered 2.7% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because First United is keeping back more of its profits to grow the business.

Final Takeaway

Is First United worth buying for its dividend? Companies like First United that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, First United looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while First United looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for First United that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.