First Financial Bankshares' (NASDAQ:FFIN) Shareholders Will Receive A Bigger Dividend Than Last Year

First Financial Bankshares, Inc. (NASDAQ:FFIN) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of January to $0.18. Even though the dividend went up, the yield is still quite low at only 3.0%.

View our latest analysis for First Financial Bankshares

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

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

First Financial Bankshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on First Financial Bankshares' last earnings report, the payout ratio is at a decent 47%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 0.02%. Analysts forecast the future payout ratio could be 52% over the same time horizon, which is a number we think the company can maintain.

First Financial Bankshares Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was $0.25, compared to the most recent full-year payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

First Financial Bankshares Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. First Financial Bankshares has impressed us by growing EPS at 6.3% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

First Financial Bankshares Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 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.