First Hawaiian's (NASDAQ:FHB) Dividend Will Be $0.26

First Hawaiian, Inc. (NASDAQ:FHB) will pay a dividend of $0.26 on the 1st of September. The dividend yield will be 5.0% based on this payment which is still above the industry average.

Check out our latest analysis for First Hawaiian

First Hawaiian's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

First Hawaiian has a good history of paying out dividends, with its current track record at 7 years. Based on First Hawaiian's last earnings report, the payout ratio is at a decent 48%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 17.7%. Fortunately, analysts forecast the future payout ratio to be 58% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

First Hawaiian Is Still Building Its Track Record

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. The dividend has gone from an annual total of $0.80 in 2016 to the most recent total annual payment of $1.04. This implies that the company grew its distributions at a yearly rate of about 3.8% over that duration. First Hawaiian hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

First Hawaiian Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that First Hawaiian has grown earnings per share at 7.9% per year over the past five years. 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, we think First Hawaiian is a solid choice as a dividend stock, even though the dividend wasn't raised this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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 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.