Here's What We Like About First National Financial's (TSE:FN) Upcoming Dividend

By
Simply Wall St
Published
February 21, 2022
TSX:FN
Source: Shutterstock

It looks like First National Financial Corporation (TSE:FN) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, First National Financial investors that purchase the stock on or after the 25th of February will not receive the dividend, which will be paid on the 15th of March.

The company's next dividend payment will be CA$0.20 per share, and in the last 12 months, the company paid a total of CA$2.85 per share. Based on the last year's worth of payments, First National Financial stock has a trailing yield of around 8.1% on the current share price of CA$44.5. If you buy this business for its dividend, you should have an idea of whether First National Financial's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for First National Financial

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 National Financial paid out more than half (60%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
TSX:FN Historic Dividend February 21st 2022

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see First National Financial's earnings per share have risen 16% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, First National Financial has increased its dividend at approximately 8.4% 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.

Final Takeaway

Is First National Financial an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and First National Financial is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, First National Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious what other investors think of First National Financial? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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