First Financial Northwest (NASDAQ:FFNW) Is Paying Out A Larger Dividend Than Last Year
The board of First Financial Northwest, Inc. (NASDAQ:FFNW) has announced that it will be increasing its dividend by 8.3% on the 24th of March to $0.13, up from last year's comparable payment of $0.12. This takes the annual payment to 3.1% of the current stock price, which is about average for the industry.
See our latest analysis for First Financial Northwest
First Financial Northwest's Earnings Will Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Having distributed dividends for at least 10 years, First Financial Northwest has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 33%, which means that First Financial Northwest would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to fall by 40.7% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 48% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
First Financial Northwest Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.16 in 2013, and the most recent fiscal year payment was $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Financial Northwest has seen EPS rising for the last five years, at 12% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
First Financial Northwest Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that First Financial Northwest is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for First Financial Northwest that you should be aware of before investing. 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.
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