First Northwest Bancorp (NASDAQ:FNWB) Is Paying Out A Dividend Of $0.07
First Northwest Bancorp's (NASDAQ:FNWB) investors are due to receive a payment of $0.07 per share on 23rd of February. The dividend yield is 1.9% based on this payment, which is a little bit low compared to the other companies in the industry.
Check out our latest analysis for First Northwest Bancorp
First Northwest Bancorp's Dividend Forecasted To Be Well Covered By Earnings
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Having paid out dividends for 5 years, First Northwest Bancorp has a good history of paying out a part of its earnings to shareholders. Past distributions unfortunately do not guarantee future ones, and First Northwest Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This value is at an alarming sign that could mean that First Northwest Bancorp's dividend at its current rate may no longer be sustainable for longer.
Analysts expect a massive rise in earnings per share in the next 3 years. They also expect the future payout ratio to be 24% over the same period, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.
First Northwest Bancorp Is Still Building Its Track Record
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 2019, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.28. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. 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.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the past five years, it looks as though First Northwest Bancorp's EPS has declined at around 18% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
First Northwest Bancorp's Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.
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 3 warning signs for First Northwest Bancorp that investors need to be conscious of moving forward. 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.
