Our analysis is based on comparing First Business Financial Services, Inc. with the following peers – PSB Holdings, Inc., PrivateBancorp, Inc., CVB Financial Corp., Wintrust Financial Corporation, Associated Banc-Corp, PacWest Bancorp, TCF Financial Corporation, 1st Source Corporation, Wells Fargo & Company and Fifth Third Bancorp (PSBQ-US, PVTB-US, CVBF-US, WTFC-US, ASB-US, PACW-US, TCF-US, SRCE-US, WFC-US and FITB-US).
First Business Financial Services, Inc.’s dividend yield is 1.98 percent and its dividend payout is 31.21 percent. This compares to a peer median dividend yield of 1.80 percent and a payout level of 31.17 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s average dividend quality score of 50 out of a possible score of 100, points to some weakness in the sustainability of its robust payout ratio, and makes its less attractive for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to March 31, 2017), FBIZ-US paid a low quality dividend, which represents a yield of 1.98% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 2 were medium quality and 3 were low quality.
- The ending cash balance, with a dividend coverage of 11.37x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to March 31, 2017), FBIZ-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 6.29x), investing cash flow (coverage of -15.03x), issuance cash flow (coverage of -0.56x) and twelve-month prior cash (coverage of 3.07x), for a total dividend coverage of 12.37x.
FBIZ-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -0.11x). Thus, the total coverage including share buybacks is 12.48x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||0.82||1.67||1.63||1.75||2.02||1.98|
|Dividend Payout (%)||8.51||16.05||23.93||23.16||28.07||31.21|
A complete list of metrics and analysis is available on the company page.
First Business Financial Services, Inc. operates as a bank holding company, which engages in the provision of commercial banking services. It offers treasury and investment management, commercial lending, equipment finance, retirement plans, trust and estate administration, private banking, and asset-based lending. The company was founded in 1986 and is headquartered in Madison, WI.
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