First Hawaiian (NASDAQ:FHB) Has Announced A Dividend Of $0.26
First Hawaiian, Inc. (NASDAQ:FHB) has announced that it will pay a dividend of $0.26 per share on the 2nd of December. Based on this payment, the dividend yield on the company's stock will be 4.1%, which is an attractive boost to shareholder returns.
View our latest analysis for First Hawaiian
First Hawaiian's Earnings Will Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
Having paid out dividends for 6 years, First Hawaiian has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Hawaiian's payout ratio of 55% is a good sign for current shareholders as this means that earnings decently cover dividends.
The next 3 years are set to see EPS grow by 28.9%. Analysts estimate the future payout ratio will be 45% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
First Hawaiian Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2016, the annual payment back then was $0.80, compared to the most recent full-year payment of $1.04. This works out to be a compound annual growth rate (CAGR) of approximately 4.5% a year over that time. First Hawaiian hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.
First Hawaiian May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 3.1% per year. Growth of 3.1% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
In Summary
Overall, a consistent dividend is a good thing, and we think that First Hawaiian has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for First Hawaiian that investors need to be conscious of moving forward. Is First Hawaiian 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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