First Financial Bankshares' (NASDAQ:FFIN) Upcoming Dividend Will Be Larger Than Last Year's
First Financial Bankshares, Inc. (NASDAQ:FFIN) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of October to $0.18. Despite this raise, the dividend yield of 2.2% is only a modest boost to shareholder returns.
View our latest analysis for First Financial Bankshares
First Financial Bankshares' Earnings Will Easily Cover The Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
First Financial Bankshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 44%, which means that First Financial Bankshares would be able to pay its last dividend without pressure on the balance sheet.
Over the next year, EPS is forecast to fall by 4.2%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 51%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
First Financial Bankshares Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.25 total annually to $0.72. This means that it has been growing its distributions at 11% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
We Could See First Financial Bankshares' Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that First Financial Bankshares has grown earnings per share at 8.7% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like First Financial Bankshares' Dividend
Overall, a dividend increase is always good, and we think that First Financial Bankshares is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for First Financial Bankshares that investors should take into consideration. Is First Financial Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
