First Hawaiian (NASDAQ:FHB) Is Due To Pay A Dividend Of $0.26

First Hawaiian, Inc.'s (NASDAQ:FHB) investors are due to receive a payment of $0.26 per share on 2nd of September. This means the annual payment is 4.0% of the current stock price, which is above the average for the industry.

View 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 established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Hawaiian's payout ratio of 56% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 18.6%. The future payout ratio could be 48% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

First Hawaiian Is Still Building Its Track Record

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 annual payment during the last 6 years was $0.80 in 2016, and the most recent fiscal year payment was $1.04. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

First Hawaiian May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, First Hawaiian has only grown its earnings per share at 3.2% per annum over the past five years. First Hawaiian is struggling to find viable investments, so it is returning more to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Our Thoughts On First Hawaiian's Dividend

Overall, we think First Hawaiian is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for First Hawaiian that investors need to be conscious of moving forward. Is First Hawaiian 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.