First Internet Bancorp (NASDAQ:INBK) Has Announced A Dividend Of $0.06

First Internet Bancorp (NASDAQ:INBK) will pay a dividend of $0.06 on the 15th of July. The dividend yield is 0.9% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for First Internet Bancorp

First Internet Bancorp's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, First Internet Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, First Internet Bancorp's payout ratio sits at 13%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to expand by 39.8%. If the dividend continues on this path, the future payout ratio could be 9.1% by next year, which we think can be pretty sustainable going forward.

historic-dividend

First Internet Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The most recent annual payment of $0.24 is about the same as the annual payment 10 years ago. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

First Internet Bancorp May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Over the past five years, it looks as though First Internet Bancorp's EPS has declined at around 2.5% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

In Summary

Overall, a consistent dividend is a good thing, and we think that First Internet Bancorp has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. See if the 4 analysts are forecasting a turnaround in our free collection of analyst estimates here. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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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