First Community Bankshares, Inc.'s (NASDAQ:FCBC) investors are due to receive a payment of $0.31 per share on 22nd of August. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.

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First Community Bankshares Not Expected To Earn Enough To Cover Its Payments

Unless the payments are sustainable, the dividend yield doesn't mean too much.

First Community Bankshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Community Bankshares' payout ratio of 45% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 0.6% over the next year. And if the dividend continues along the path it has been on recently, the future payout ratio in 12 months could be 132%, which is definitely a bit high to be sustainable going forward.

Check out our latest analysis for First Community Bankshares

First Community Bankshares Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.52, compared to the most recent full-year payment of $1.24. This means that it has been growing its distributions at 9.1% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

First Community Bankshares Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. First Community Bankshares has seen EPS rising for the last five years, at 5.6% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Our Thoughts On First Community Bankshares' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about First Community Bankshares' payments, as there could be some issues with sustaining them into the future. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments First Community Bankshares has been making. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for First Community Bankshares that investors should take into consideration. Is First Community Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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