Exploring the Dividend Performance and Sustainability of Farmers & Merchants Bancorp (FMCB, Financial)
Farmers & Merchants Bancorp (FMCB) recently announced a dividend of $8.8 per share, payable on 2024-07-01, with the ex-dividend date set for 2024-06-11. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Farmers & Merchants Bancorp's dividend performance and assess its sustainability.
What Does Farmers & Merchants Bancorp Do?
Farmers & Merchants Bancorp is a bank holding company. The bank offers services such as checking accounts, savings accounts, money market accounts, online banking, and other banking services.
A Glimpse at Farmers & Merchants Bancorp's Dividend History
Farmers & Merchants Bancorp has maintained a consistent dividend payment record since 1966. Dividends are currently distributed on a bi-annually basis. Farmers & Merchants Bancorp has increased its dividend each year since 1966. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 58 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Farmers & Merchants Bancorp's Dividend Yield and Growth
As of today, Farmers & Merchants Bancorp currently has a 12-month trailing dividend yield of 1.74% and a 12-month forward dividend yield of 1.79%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Farmers & Merchants Bancorp's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate decreased to 4.30% per year. And over the past decade, Farmers & Merchants Bancorp's annual dividends per share growth rate stands at 3.10%.
Based on Farmers & Merchants Bancorp's dividend yield and five-year growth rate, the 5-year yield on cost of Farmers & Merchants Bancorp stock as of today is approximately 2.15%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, Farmers & Merchants Bancorp's dividend payout ratio is 0.15.
Farmers & Merchants Bancorp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Farmers & Merchants Bancorp's profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Farmers & Merchants Bancorp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Farmers & Merchants Bancorp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Farmers & Merchants Bancorp's revenue has increased by approximately 13.50% per year on average, a rate that outperforms approximately 72.05% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Farmers & Merchants Bancorp's earnings increased by approximately 16.40% per year on average, a rate that outperforms approximately 53% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 13.40%, which outperforms approximately 68.81% of global competitors.
Conclusion
Considering Farmers & Merchants Bancorp's strong dividend history, consistent growth in dividend payouts, and robust financial health indicated by its low payout ratio and solid profitability, the dividend appears sustainable. The company's growth metrics further support the likelihood of continued dividend increases, making it an attractive option for value investors focused on income generation. For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
