First Financial Northwest (NASDAQ:FFNW) Has Announced A Dividend Of US$0.12

By
Simply Wall St
Published
May 20, 2022
NasdaqGS:FFNW
Source: Shutterstock

First Financial Northwest, Inc. (NASDAQ:FFNW) has announced that it will pay a dividend of US$0.12 per share on the 17th of June. This means the dividend yield will be fairly typical at 2.8%.

Check out our latest analysis for First Financial Northwest

First Financial Northwest's Earnings Easily Cover the Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, First Financial Northwest's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 8.9%. If the dividend continues along recent trends, we estimate the payout ratio could be 39%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

historic-dividend
NasdaqGS:FFNW Historic Dividend May 20th 2022

First Financial Northwest Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The first annual payment during the last 9 years was US$0.16 in 2013, and the most recent fiscal year payment was US$0.48. This means that it has been growing its distributions at 13% per annum over that time. First Financial Northwest has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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. First Financial Northwest has seen EPS rising for the last five years, at 12% per annum. 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.

First Financial Northwest Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for First Financial Northwest you should be aware of, and 1 of them is a bit concerning. Is First Financial Northwest not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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