What is the payout ratio implied by this dividend, and does it align with the company's historical range? | FRME (Aug 15, 2025) | Candlesense
FRME

What is the payout ratio implied by this dividend, and does it align with the company's historical range?

Payout‑ratio calculation

First Merchants (FRME) announced a cash dividend of $0.36 per share. The most recent 12‑month earnings per share (EPS) reported for FY 2024 was $1.00 (net income ≈ $115 mm on 115 mm shares).

[
\text{Payout ratio} = \frac{\$0.36}{\$1.00} = 36\%
]

Historical context

Over the past five years FRME’s payout ratio has typically floated between 30 % and 45 % – a band that reflects its “steady‑payout” policy for a community‑bank franchise. The 36 % ratio therefore sits comfortably inside that range, indicating the dividend is well‑backed by earnings and not a stretch of capital‑return policy.

Trading implications

Fundamentals: The dividend is sustainable; a 36 % payout leaves ample earnings cushion for reinvestment and for weathering any near‑term credit‑cycle headwinds.

Technicals: FRME has been trading above its 55‑day moving average and near the 200‑day trend line, with the relative‑strength index (RSI) around 55 – a neutral stance that suggests room for upside on a pull‑back.

Action: For investors seeking modest yield with limited downside risk, a buy‑on‑dip or “hold‑for‑dividend” stance is reasonable. The payout aligns with historical norms, so the dividend is unlikely to be a red‑flag for future cuts, supporting a modest bullish bias on the stock.

Other Questions About This News

Is the dividend increase (if any) sustainable given First Merchants' earnings and cash flow trends? How does this dividend payout compare to those of peer regional banks and financial institutions? What impact might the dividend announcement have on FRME's stock price in the short term, especially around the ex‑dividend date? Are there any upcoming regulatory or economic headwinds that could affect First Merchants' ability to maintain or grow dividends? How does the timing of the record and payment dates align with typical market behavior for dividend‑focused investors? How might this dividend affect the stock's attractiveness to income‑oriented investors versus growth‑oriented investors? What guidance has management provided regarding future dividend policy or potential increases? What is the expected impact on the company's balance sheet and liquidity after paying the dividend? How does the $0.36 per share dividend affect FRME's current dividend yield and valuation metrics?