Can someone help with a one pager We have seen examples of f

Can someone help with a one pager?

We have seen examples of firms that have announced dividends, stock splits, and reverse stock splits. The assigned research paper reading looked at firm’s decisions and what factors appear to affect payout decisions. For this activity you will write a short one page to one and a half page paper on a firm of your choosing meeting the following criteria: Publicly traded You can provide a link to the firm’s profile and financial summary (similar to what can be found in Yahoo finance. Note: this can be other websites and non U.S. stocks can be used as well An announcement that a firm has split, repurchased, dividend, or other payout discussed in the module’s readings in the past 3 months. The announcement could include the announcement of a firm cancelling their dividend payments as well as the various payouts. For the selected firm provide a brief profile of the firm including the primary businesses/industry of the firm. Provide an overview of the industry. Address issues such as whether the firm is considered being in a growth industry, mature industry and the role/impact your firm has on the industry. Discuss the payout strategy selected by your firm. What did the firm announce? Why did the firm make the announcement? Based on your study of dividends and other payouts does the strategy make sense? What signals is management sending with the announcement? Do you agree with the decision? As a shareholder would you be pleased with the announcement? Why or why not?

Solution

Company: 1^st Source Corporation (NasdaqGS: SRCE)

Company Snapshot, Pricing, Dividend and other details can be accessed from the following link:

https://www.morningstar.com/stocks/xnas/srce/quote.html

Dividends — The ability of the Bank to pay dividends is limited by state and Federal laws and regulations that require the Bank to obtain the prior approval of the DFI and the Federal Reserve Bank of Chicago before paying a dividend that, together with other dividends it has paid during a calendar year, would exceed the sum of its net income for the year to date combined with its retained net income for the previous two years. The amount of dividends the Bank may pay may also be limited by certain covenant agreements and by the principles of prudent bank management.

On the 15 May 2018, 1st Source Corporation (NASDAQ:SRCE) paid its shareholders a dividend amount of $0.24 per share.

Since, 1^st source is a mature company and does not need to invest as much in itself, the company opts for the distribution of earnings as dividends to shareholders. This is a good strategy as per me considering company is mature and it keeps the investors happy with a steady income. Also the stock market sees the move as a good one considering management is positive about the future earnings of the company.

Analysis:

In the last 10 years, 1st Source Corporation (NASDAQ:SRCE) has returned 3 % per annum to its investors in the form of dividend payouts. The current LTM payout ratio for the stock is 30.71%, signalling the dividend is easily covered by earnings. However, as we look forward, the payout is expected to fall to 26.23% of its earnings, which leads to a dividend yield of 1.70%. However, EPS should increase to $3.31, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, 1st Source generates a yield of 1.67%, which is on the low-side for Banks stocks.

I believe the new tax act gives us additional funds to invest in the company\'s long term future and that’s the reason, we have seen an increase in dividend to shareholders

Recommendation:

If 1st Source is in your portfolio for cash-generating reasons, there may be better alternatives out there. However for an investor who is NOT specifically looking for dividend paying companies, the stock could still offer some interesting investment opportunities. This recommendation is being given purely from a dividend payout and analysis perspective.