Is It Smart To Buy Farmers National Banc Corp. (NASDAQ:FMNB) Before It Goes Ex-Dividend?

Simply Wall St
·3 min read

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 Farmers National Banc Corp. (NASDAQ:FMNB) is about to go ex-dividend in just four 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Farmers National Banc's shares on or after the 8th of December will not receive the dividend, which will be paid on the 30th of December.

The company's next dividend payment will be US$0.17 per share, and in the last 12 months, the company paid a total of US$0.64 per share. Based on the last year's worth of payments, Farmers National Banc has a trailing yield of 4.4% on the current stock price of $15.4. If you buy this business for its dividend, you should have an idea of whether Farmers National Banc's dividend is reliable and sustainable. As a result, readers should always check whether Farmers National Banc has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Farmers National Banc

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Farmers National Banc paid out a comfortable 39% of its profit last year.

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

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Farmers National Banc's earnings per share have risen 15% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Farmers National Banc has lifted its dividend by approximately 19% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Should investors buy Farmers National Banc for the upcoming dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Farmers National Banc appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Curious what other investors think of Farmers National Banc? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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

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.

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