Why Farmers & Merchants Bancorp Outshines Merchants Bancorp in Dividend Reliability and Growth Potential

Investors seeking reliable income in regional banking stocks face a stark choice: Farmers & Merchants Bancorp (FMCB), a Dividend King with 60 years of consecutive increases, or Merchants Bancorp (MBIN), whose stagnant $0.10/share dividend has seen little growth in recent quarters. Let’s dissect which bank offers the better income play—and why FMCB’s discipline and resilience make it the clear winner.

The Dividend Divide: FMCB’s 5.7% Hike vs. MBIN’s Stagnation

Farmers & Merchants Bancorp just raised its semi-annual dividend to $9.30 per share—a 5.7% increase over 2024—maintaining its status as one of only 55 U.S. “Dividend Kings” (companies with 60+ years of consecutive hikes). This isn’t just about yield: FMCB’s dividend growth rate has averaged 5.8% annually, supported by a 5.97% rise in diluted EPS to $123.32 (TTM as of March 2025).

By contrast, Merchants Bancorp’s quarterly dividend has languished at $0.10 per share since early 2025, despite a 15.6% “growth” tag. While this payout is stable, it’s laughably small: MBIN’s annual dividend totals just $0.40 per share, yielding a paltry 1.2%. Even its recent hike from $0.09 to $0.10 (a 11.1% increase) pales next to FMCB’s 5.7% semi-annual boost—and FMCB’s $17.60 annual dividend (yielding 3.2% at recent prices).

Why FMCB’s Earnings and Credit Metrics Are Bulletproof

FMCB isn’t just about dividends—it’s a financial fortress. Its delinquency rate is 0.01% of loans (as of March 2025), with nonperforming loans at a negligible $193,000. Even its credit reserves—$75.4 million or 2.1% of loans—are twice the industry average. This stability underpins its dividend: FMCB’s payout ratio (dividends/earnings) remains comfortably low, even as EPS grows.

Merchants Bancorp? Not so much. Its Q1 2025 EPS plunged 48% to $0.93 due to rising delinquencies (2.73% of loans) and soaring expenses. While MBIN’s payout ratio is a meager 6.8%, its stagnant dividend growth reflects a lack of ambition—and a risky bet in a rising-rate environment.

The Bottom Line: FMCB’s Dividend Discipline Trumps MBIN’s Mediocrity

Farmers & Merchants Bancorp isn’t just a dividend machine—it’s a model of prudent banking. Its 60-year streak of hikes, rock-bottom delinquency, and EPS resilience make it a safer, higher-yielding option. MBIN, meanwhile, offers little more than a token payout—its stagnant $0.10 dividend and plunging Q1 earnings reveal a bank struggling to capitalize on its low payout ratio.

For income investors, the choice is clear: FMCB’s 3.2% yield and proven growth offer far better upside than MBIN’s 1.2% “stability.” In a sector where credit quality and dividend discipline matter most, FMCB isn’t just king—it’s a crown jewel.

Act now: FMCB’s Dividend King status and fortress-like balance sheet make it a rare buy in regional banking. MBIN? Save it for speculators.