First Financial Bancorp (NASDAQ:FFBC) Has Announced A Dividend Of US$0.23
The board of First Financial Bancorp. (NASDAQ:FFBC) has announced that it will pay a dividend of US$0.23 per share on the 15th of June. This means the annual payment is 4.5% of the current stock price, which is above the average for the industry.
See our latest analysis for First Financial Bancorp
First Financial Bancorp's Payment Has Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by First Financial Bancorp's earnings. This means that a large portion of its earnings are being retained to grow the business.
EPS is set to fall by 2.8% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 48%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from US$0.48 in 2012 to the most recent annual payment of US$0.92. This implies that the company grew its distributions at a yearly rate of about 6.7% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. First Financial Bancorp might have put its house in order since then, but we remain cautious.
We Could See First Financial Bancorp's Dividend Growing
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. First Financial Bancorp has impressed us by growing EPS at 6.8% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
Our Thoughts On First Financial Bancorp's Dividend
Overall, we think First Financial Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 3 warning signs for First Financial Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
