Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see First Northwest Bancorp (NASDAQ:FNWB) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 21st of November, you won't be eligible to receive this dividend, when it is paid on the 6th of December.
First Northwest Bancorp's next dividend payment will be US$0.04 per share. Last year, in total, the company distributed US$0.16 to shareholders. Based on the last year's worth of payments, First Northwest Bancorp stock has a trailing yield of around 0.9% on the current share price of $17.34. 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! So we need to investigate whether First Northwest Bancorp can afford its dividend, and if the dividend could grow.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. First Northwest Bancorp paid out just 13% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see First Northwest Bancorp's earnings have been skyrocketing, up 32% per annum for the past five years.
Given that First Northwest Bancorp has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
Is First Northwest Bancorp an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, First Northwest Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Keen to explore more data on First Northwest Bancorp's financial performance? Check out our visualisation of its historical revenue and earnings growth.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.