First Savings Financial Group, Inc. (NASDAQ:FSFG) Looks Interesting, And It's About To Pay A Dividend
Readers hoping to buy First Savings Financial Group, Inc. (NASDAQ:FSFG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 16th of March will not receive the dividend, which will be paid on the 31st of March.
First Savings Financial Group's next dividend payment will be US$0.18 per share, and in the last 12 months, the company paid a total of US$0.68 per share. Based on the last year's worth of payments, First Savings Financial Group stock has a trailing yield of around 1.0% on the current share price of $68.74. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether First Savings Financial Group has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for First Savings Financial Group
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. First Savings Financial Group paid out just 4.0% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. First Savings Financial Group paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit First Savings Financial Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see First Savings Financial Group's earnings have been skyrocketing, up 41% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, eight years ago, First Savings Financial Group has lifted its dividend by approximately 7.6% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is First Savings Financial Group worth buying for its dividend? Companies like First Savings Financial Group that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, First Savings Financial Group looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while First Savings Financial Group has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 3 warning signs with First Savings Financial Group (at least 2 which can't be ignored), and understanding these should be part of your investment process.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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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