First National Financial (TSE:FN) Is Paying Out A Dividend Of CA$0.1958

The board of First National Financial Corporation (TSE:FN) has announced that it will pay a dividend on the 14th of October, with investors receiving CA$0.1958 per share. This means the annual payment is 9.3% of the current stock price, which is above the average for the industry.

View our latest analysis for First National Financial

First National Financial's Dividend Forecasted To Be Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much.

First National Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on First National Financial's last earnings report, the payout ratio is at a decent 70%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 2.5%. Fortunately, the future payout ratio could reach 79% in the same 3 years as estimated by analysts, which is on the higher side, but certainly still feasible.

First National Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CA$1.60 in 2012, and the most recent fiscal year payment was CA$3.60. This means that it has been growing its distributions at 8.4% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that First National Financial's earnings per share has fallen at approximately 2.0% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On First National Financial's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While First National Financial is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think First National Financial is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for First National Financial that you should be aware of before investing. Is First National Financial 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.