First Financial Northwest (NASDAQ:FFNW) Has Affirmed Its Dividend Of $0.12

First Financial Northwest, Inc. (NASDAQ:FFNW) will pay a dividend of $0.12 on the 16th of December. This payment means that the dividend yield will be 3.2%, which is around the industry average.

Check out our latest analysis for First Financial Northwest

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

Unless the payments are sustainable, the dividend yield doesn't mean too much.

First Financial Northwest has a good history of paying out dividends, with its current track record at 9 years. Past distributions do not necessarily guarantee future ones, but First Financial Northwest's payout ratio of 33% is a good sign for current shareholders as this means that earnings decently cover dividends.

EPS is set to fall by 26.5% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 41% over the same time period, which is in a pretty comfortable range.

First Financial Northwest Doesn't Have A Long Payment History

First Financial Northwest's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2013, the dividend has gone from $0.16 total annually to $0.48. This means that it has been growing its distributions at 13% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Financial Northwest has impressed us by growing EPS at 9.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for First Financial Northwest's prospects of growing its dividend payments in the future.

We Really Like First Financial Northwest's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Case in point: We've spotted 2 warning signs for First Financial Northwest (of which 1 shouldn't be ignored!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.