First Financial Northwest (NASDAQ:FFNW) Will Pay A Dividend Of $0.12

First Financial Northwest, Inc.'s (NASDAQ:FFNW) investors are due to receive a payment of $0.12 per share on 16th of September. This payment means that the dividend yield will be 3.1%, which is around the industry average.

View our latest analysis for First Financial Northwest

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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

First Financial Northwest has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Financial Northwest's payout ratio of 35% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 8.6%. Despite that, analysts estimate the future payout ratio could be 40% over the same time period, which is in a pretty comfortable range.

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 dividend has gone from an annual total of $0.16 in 2013 to the most recent total annual payment of $0.48. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

First Financial Northwest Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. First Financial Northwest has impressed us by growing EPS at 7.8% per year over the past five years. First Financial Northwest definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On First Financial Northwest's Dividend

Overall, we think First Financial Northwest is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for First Financial Northwest (1 shouldn't be ignored!) that you should be aware of before investing. 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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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.