First Hawaiian (NASDAQ:FHB) Has Affirmed Its Dividend Of $0.26

First Hawaiian, Inc. (NASDAQ:FHB) will pay a dividend of $0.26 on the 2nd of June. This means the annual payment is 5.7% of the current stock price, which is above the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. First Hawaiian's stock price has reduced by 34% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

See our latest analysis for First Hawaiian

First Hawaiian's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

First Hawaiian has a good history of paying out dividends, with its current track record at 6 years. Taking data from its last earnings report, calculating for the company's payout ratio of 48%shows that First Hawaiian would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 12.9% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 60%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

First Hawaiian Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. Since 2017, the annual payment back then was $0.80, compared to the most recent full-year payment of $1.04. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

We Could See First Hawaiian's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. First Hawaiian has impressed us by growing EPS at 9.1% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like First Hawaiian'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 earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for First Hawaiian (of which 1 is a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.