Down 23% With a 6.7% Yield, Is This High Dividend Stock Too Cheap to Ignore, and Worth Buying in December?

First of Long Island Corp. (FLIC) has experienced a significant price drop of 23% while offering a high dividend yield of 6.7%. This raises the question: is FLIC too cheap to ignore, and should investors consider buying in December? To answer this, we must analyze the company's fundamentals, market sentiment, and sector-specific factors.



FLIC's fundamentals appear relatively stable, with a payout ratio of 50% and a 5-year dividend growth rate of 8%. The company's earnings growth and free cash flow have been robust, supporting its high dividend yield. However, the stock's recent decline may be attributed to market sentiment and sector-specific factors.

Market sentiment has played a role in FLIC's price drop, as the banking sector has faced headwinds due to concerns about a potential economic slowdown and interest rate hikes. However, FLIC's earnings per share have been relatively stable, with a slight decline from $0.21 in Q2 2024 to $0.20 in Q3 2024. This suggests that the stock's price drop may not be entirely justified by fundamentals.

Sector-specific factors, such as FLIC's net interest margin (NIM) decline from 2.17% in Q1 2024 to 1.80% in Q2 2024, have also contributed to the stock's price drop. This decline in NIM led to a meaningful decrease in FLIC's net interest income. However, it's crucial to consider that FLIC's revenues beat analysts' forecasts in Q2 2024, indicating that the company's fundamentals may not be as weak as the stock price suggests.



In conclusion, while market sentiment and sector-specific factors have played a role in FLIC's price drop, the stock's fundamentals appear relatively stable. With a high dividend yield of 6.7%, FLIC may be an attractive investment opportunity for income-oriented investors willing to take on some risk. However, it's essential to conduct thorough due diligence and consider the company's long-term prospects before making an investment decision.

As we approach December, investors should monitor FLIC's performance and evaluate whether the stock's recent decline presents a compelling entry point. By considering the company's fundamentals, market sentiment, and sector-specific factors, investors can make informed decisions about whether FLIC is too cheap to ignore.