First National Financial (TSE:FN) Is Increasing Its Dividend To CA$0.20

By
Simply Wall St
Published
May 19, 2021
TSX:FN
Source: Shutterstock

The board of First National Financial Corporation (TSE:FN) has announced that it will be increasing its dividend on the 15th of June to CA$0.20. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

Check out our latest analysis for First National Financial

First National Financial's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by First National Financial's earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 6.2%. If the dividend continues on this path, the payout ratio could be 63% by next year, which we think can be pretty sustainable going forward.

historic-dividend
TSX:FN Historic Dividend May 20th 2021

First National Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was CA$1.50 in 2011, and the most recent fiscal year payment was CA$2.85. This works out to be a compound annual growth rate (CAGR) of approximately 6.6% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. First National Financial has impressed us by growing EPS at 11% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like First National Financial's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for First National Financial for free with public analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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