First Northwest Bancorp (NASDAQ:FNWB) Is Paying Out A Dividend Of $0.07

First Northwest Bancorp (NASDAQ:FNWB) will pay a dividend of $0.07 on the 25th of November. This means the annual payment will be 1.9% of the current stock price, which is lower than the industry average.

View our latest analysis for First Northwest Bancorp

First Northwest Bancorp's Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

First Northwest Bancorp has a short history of paying out dividends, with its current track record at only 4 years. While it has a shorter history of paying out dividends, First Northwest Bancorp's payout ratio of 18% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Looking forward, EPS is forecast to rise by 80.7% over the next 3 years. Analysts forecast the future payout ratio could be 12% over the same time horizon, which is a number we think the company can maintain.

First Northwest Bancorp Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2018, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.28. This means that it has been growing its distributions at 24% per annum over that time. First Northwest Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. First Northwest Bancorp has impressed us by growing EPS at 22% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

First Northwest Bancorp Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for First Northwest Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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