First Financial Bankshares (NASDAQ:FFIN) Is Increasing Its Dividend To $0.17

The board of First Financial Bankshares, Inc. (NASDAQ:FFIN) has announced that it will be paying its dividend of $0.17 on the 3rd of October, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 1.5%.

Check out our latest analysis for First Financial Bankshares

First Financial Bankshares' Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

First Financial Bankshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on First Financial Bankshares' last earnings report, the payout ratio is at a decent 38%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to rise by 6.0% over the next year. If the dividend continues on this path, the future payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

First Financial Bankshares 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 $0.24 in 2012, and the most recent fiscal year payment was $0.68. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that First Financial Bankshares has grown earnings per share at 15% per year over the past five years. First Financial Bankshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like First Financial Bankshares' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 First Financial Bankshares analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is First Financial Bankshares 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.