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

First Hawaiian, Inc. (NASDAQ:FHB) has announced that it will pay a dividend of US$0.26 per share on the 3rd of June. This makes the dividend yield 3.9%, which will augment investor returns quite nicely.

Check out our latest analysis for First Hawaiian

First Hawaiian's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by First Hawaiian's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 6.9% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 59%, which we are pretty comfortable with and we think is feasible on an earnings basis.

First Hawaiian Doesn't Have A Long Payment History

First Hawaiian'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. The dividend has gone from US$0.80 in 2017 to the most recent annual 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Hawaiian has seen EPS rising for the last five years, at 5.6% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

In Summary

Overall, a consistent dividend is a good thing, and we think that First Hawaiian has the ability to continue this into the future. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for First Hawaiian that you should be aware of before investing. 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.