Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that First Internet Bancorp (NASDAQ:INBK) is about to go ex-dividend in just 2 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company’s books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. Accordingly, First Internet Bancorp investors that purchase the stock on or after the 31st of March will not receive the dividend, which will be paid on the 15th of April.
The company’s next dividend payment will be US$0.06 per share, on the back of last year when the company paid a total of US$0.24 to shareholders. Based on the last year’s worth of payments, First Internet Bancorp has a trailing yield of 0.9% on the current stock price of US$26.78. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it’s growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. First Internet Bancorp has a low and conservative payout ratio of just 8.3% of its income after tax.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for First Internet Bancorp
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it’s a relief to see First Internet Bancorp earnings per share are up 2.9% per annum over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. First Internet Bancorp’s dividend payments are broadly unchanged compared to where they were 10 years ago.
Is First Internet Bancorp an attractive dividend stock, or better left on the shelf? First Internet Bancorp has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, First Internet Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
