First Financial Northwest (NASDAQ:FFNW) Has Affirmed Its Dividend Of $0.12
First Financial Northwest, Inc. (NASDAQ:FFNW) will pay a dividend of $0.12 on the 16th of September. This means that the annual payment will be 3.1% of the current stock price, which is in line with the average for the industry.
View our latest analysis for First Financial Northwest
First Financial Northwest's Earnings Will Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
Having paid out dividends for 9 years, First Financial Northwest has a good history of paying out a part of its earnings to shareholders. Based on First Financial Northwest's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next 3 years, EPS is forecast to fall by 8.6%. Fortunately, analysts forecast the future payout ratio to be 40% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
First Financial Northwest Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of $0.16 in 2013 to the most recent total annual payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
First Financial Northwest Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that First Financial Northwest has grown earnings per share at 7.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for First Financial Northwest's prospects of growing its dividend payments in the future.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for First Financial Northwest (1 shouldn't be ignored!) that you should be aware of before investing. Is First Financial Northwest 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.
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