First Hawaiian (NASDAQ:FHB) Is Paying Out A Dividend Of $0.26

First Hawaiian, Inc.'s (NASDAQ:FHB) investors are due to receive a payment of $0.26 per share on 1st of December. This makes the dividend yield 5.8%, which will augment investor returns quite nicely.

View our latest analysis for First Hawaiian

First Hawaiian's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

First Hawaiian has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Hawaiian's payout ratio of 50% is a good sign for current shareholders as this means that earnings decently cover dividends.

EPS is set to fall by 16.5% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 58% over the same time period, which we think the company can easily maintain.

First Hawaiian Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2016, the dividend has gone from $0.80 total annually to $1.04. This works out to be a compound annual growth rate (CAGR) of approximately 3.8% a year over that time. 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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. First Hawaiian has seen EPS rising for the last five years, at 6.0% per annum. 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

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. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, First Hawaiian has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.