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First Financial Bankshares, Inc. (NASDAQ:FFIN) Passed Our Checks, And It's About To Pay A US$0.13 Dividend

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Simply Wall St
·3 min read
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First Financial Bankshares, Inc. (NASDAQ:FFIN) stock is about to trade ex-dividend in four days. Investors can purchase shares before the 15th of December in order to be eligible for this dividend, which will be paid on the 4th of January.

First Financial Bankshares's next dividend payment will be US$0.13 per share, and in the last 12 months, the company paid a total of US$0.52 per share. Based on the last year's worth of payments, First Financial Bankshares has a trailing yield of 1.5% on the current stock price of $34.91. If you buy this business for its dividend, you should have an idea of whether First Financial Bankshares's dividend is reliable and sustainable. So we need to investigate whether First Financial Bankshares can afford its dividend, and if the dividend could grow.

Check out our latest analysis for First Financial Bankshares

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see First Financial Bankshares paying out a modest 38% of its earnings.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, First Financial Bankshares's earnings per share have been growing at 13% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, First Financial Bankshares has lifted its dividend by approximately 8.7% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy First Financial Bankshares for the upcoming dividend? Companies like First Financial Bankshares that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating First Financial Bankshares more closely.

So while First Financial Bankshares looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - First Financial Bankshares has 2 warning signs we think you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.