Why First Bancorp (FBNC) is a Great Dividend Stock Right Now

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.First Bancorp in FocusFirst Bancorp (FBNC) is headquartered in Southern Pines, and is in the Finance sector. The stock has seen a price change of 0.27% since the start of the year. Currently paying a dividend of $0.22 per share, the company has a dividend yield of 2.09%. In comparison, the Banks - Southeast industry's yield is 2.37%, while the S&P 500's yield is 1.57%.Looking at dividend growth, the company's current annualized dividend of $0.92 is up 4.5% from last year. First Bancorp has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 4.32%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, First Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.Earnings growth looks solid for FBNC for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.54 per share, representing a year-over-year earnings growth rate of 27.80%.Bottom LineInvestors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that FBNC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Bancorp (FBNC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks