First Internet Bancorp (NASDAQ:INBK) Has Affirmed Its Dividend Of $0.06

First Internet Bancorp’s (NASDAQ:INBK) investors are due to receive a payment of $0.06 per share on 15th of October. This means the annual payment will be 1.0% of the current stock price, which is lower than the industry average.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible.

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 14%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share is forecast to rise by 104.6% over the next year. If the dividend continues on this path, the future payout ratio could be 6.6% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for First Internet Bancorp

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. There hasn’t been much of a change in the dividend over the last 10 years. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren’t all that rosy. First Internet Bancorp has seen earnings per share falling at 5.7% per year over the last five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Overall, a consistent dividend is a good thing, and we think that First Internet Bancorp has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Given that earnings are not growing, the dividend does not look nearly so attractive. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 4 analysts we track are forecasting for the future. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.