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

The board of First Hawaiian, Inc. (NASDAQ:FHB) has announced that it will pay a dividend on the 3rd of September, with investors receiving US$0.26 per share. This means the annual payment is 3.7% of the current stock price, which is above the average for the industry.

See our latest analysis for First Hawaiian

First Hawaiian's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, First Hawaiian's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 11.2%. If the dividend continues along recent trends, we estimate the payout ratio could be 64%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

First Hawaiian Is Still Building Its Track Record

It is great to see that First Hawaiian has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the first annual payment was US$0.80, compared to the most recent full-year payment of US$1.04. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider First Hawaiian to be a consistent dividend paying stock.

First Hawaiian 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. It's encouraging to see First Hawaiian has been growing its earnings per share at 5.3% a 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.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for First Hawaiian (1 is potentially serious!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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