Exploring the Dividend History, Yield, and Sustainability of Financial Institutions Inc (FISI, Financial)
Financial Institutions Inc (FISI) recently announced a dividend of $0.3 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-13. 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 deep dive into Financial Institutions Inc's dividend performance and assess its sustainability.
What Does Financial Institutions Inc Do?
Financial Institutions Inc operates as a financial holding company, engaging in the provision of a wide range of consumer and commercial banking services to individuals, municipalities, and businesses in Western and Central New York. It operates through the following segments: The Banking segment which includes all of the company's retail and commercial banking operations and All Other includes the activities of SDN, a full-service insurance agency that provides a broad range of insurance services to both personal and business clients.
A Glimpse at Financial Institutions Inc's Dividend History
Financial Institutions Inc has maintained a consistent dividend payment record since 1999. Dividends are currently distributed on a quarterly basis. Financial Institutions Inc has increased its dividend each year since 2009. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years.
Breaking Down Financial Institutions Inc's Dividend Yield and Growth
As of today, Financial Institutions Inc currently has a 12-month trailing dividend yield of 6.73% and a 12-month forward dividend yield of 6.84%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Financial Institutions Inc's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate increased to 5.70% per year. And over the past decade, Financial Institutions Inc's annual dividends per share growth rate stands at 6.20%.
Based on Financial Institutions Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Financial Institutions Inc stock as of today is approximately 8.88%.
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 2023-06-30, Financial Institutions Inc's dividend payout ratio is 0.36.
Financial Institutions Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Financial Institutions Inc's profitability 6 out of 10 as of 2023-06-30, 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. Financial Institutions Inc'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 Financial Institutions Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Financial Institutions Inc's revenue has increased by approximately 9.00% per year on average, a rate that outperforms than approximately 63.76% 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, Financial Institutions Inc's earnings increased by approximately 6.30% per year on average, a rate that outperforms than approximately 43.4% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 13.40%, which outperforms than approximately 66.35% of global competitors.
Conclusion
In conclusion, Financial Institutions Inc's consistent dividend payments, growth rate, and relatively low payout ratio suggest a sustainable dividend policy. The company's profitability and growth metrics indicate a solid foundation for future growth. Therefore, Financial Institutions Inc appears to be a promising prospect for investors seeking dividend income. However, like any investment, it is essential to conduct thorough research and consider the company's overall financial health before making a decision.
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