First Commonwealth Financial Corporation Rewards Shareholders With 12.5% Dividend Boost (FCF)
By: Ned Piplovic,
First Commonwealth Financial Corporation (NYSE:FCF) rewarded its investors with a 12.5% quarterly dividend hike and announced its first quarter 2018 financial results on April 24, 2018, which included the highest level of quarterly net income in the company’s history – $23.3 million or $0.24 diluted earnings per share.
In addition to raising its dividend in the short term, the company more than tripled its share price since the end of the 2008-2009 financial crisis. Even over the shorter term of the last 12 months, the company’s rising dividend income distribution and robust asset appreciation combined for a total return on shareholder’s investment of nearly 20%.
The company’s next ex-dividend date is on May 4, 2018, and it will distribute its upcoming dividends to all its shareholders of record just two weeks later on the May 18, 2018, pay date.
First Commonwealth Financial Corporation (NYSE:FCF)
Headquartered in Indiana, Pennsylvania, and founded in 1934, the First Commonwealth Financial Corporation operates as a holding company for the First Commonwealth Bank, which provides consumer and commercial banking services in the U.S. Northeast. As of April 2018, the company had $7.4 billion in total assets and operated 135 banking offices and almost 150 automated teller machines (ATMs) in 20 counties throughout western and central Pennsylvania and northern and central Ohio, as well as a Corporate Banking Center in Cleveland, Ohio, and mortgage offices in Stow and Dublin, Ohio.
The company’s current $0.09 dividend distribution corresponds to a $0.36 annualized payout for 2018 and yields 2.4%. First Commonwealth Financial Corporation’s rising share price – which more than doubled in the past five years – suppressed the company’s current yield more than 12% below its 2.7% average yield over the past five years. Following the 2008 financial crisis, the company cut its annual dividend for two years in a row and reduced its annual payout amount more than 90% from $0.68 in 2008 to $0.06 in 2010. These cuts were the only reductions to the company’s annual dividend in two decades.
Starting in 1991, the company hiked its annual dividend payout for 16 consecutive years and then paid the same $0.68 annual dividend in 2007 and 2008 as it did in 2006. The company boosted its annual dividend again for the next four consecutive years starting in 2011. Despite failing to hike its annual dividend payouts in 2015 and 2016, the company has enhanced its total annual dividend amount 500% since 2010. Over that eight-year period, the company managed to maintain an annual dividend growth rate of more than 25% per year.
While slightly below the 3.3% average yield of the entire Financials sector, FCF’s current 2.4% yield outperformed average yields of the company’s industry peers. First Commonwealth Financial Corporation’s 2.4% yield is 31% above the simple average of all the companies in the Northeast Regional Banks market segment and 5.7% higher than the 2.23% average yield of only dividend-paying companies.
The company’s share price declined almost 10% over the first four months of the trailing 12-month period and reached its 52-week low of $12.14 on September 7, 2017. However, after bottoming out in early September, the share price embarked on a steep uptrend and regained its losses over the previous four months in just three weeks. The share price continued its ascent until it gained more than 26% over the 52-week low and achieved its 52-week high of $15.32 on December 4, 2017.
After peaking at the beginning of December 2017, the share price experienced a moderate amount of volatility and dipped as much as 11.3% below the December peak level after the overall market sell-off on February 8, 2018. However, the share price resumed its ascent and closed on April 25, 2018 at $15.27 – merely 0.3% short of its peak price in December. Additionally, the $15.27 closing price on April 25 was 13.4% higher than it was 12 months earlier, 25.8% above the 52-week low from September 2017 and 116% higher than it was five years earlier.
Through share-price volatility and a few years of missed annual dividend hikes, the company’s long-term shareholders enjoyed robust total returns on their investments. Just over the past 12 months, the company rewarded its investors with a 19.2% total return. The total returns over the past three and five years were 81% and 139%, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.