First Northwest Bancorp's (NASDAQ:FNWB) Dividend Will Be $0.07

First Northwest Bancorp (NASDAQ:FNWB) will pay a dividend of $0.07 on the 24th of February. Including this payment, the dividend yield on the stock will be 1.8%, which is a modest boost for shareholders' returns.

View our latest analysis for First Northwest Bancorp

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

If it is predictable over a long period, even low dividend yields can be attractive.

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 16% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Over the next 3 years, EPS is forecast to expand by 11.9%. The future payout ratio could be 15% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

First Northwest Bancorp Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2019, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.28. This works out to be a compound annual growth rate (CAGR) of approximately 24% a year 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 seen EPS rising for the last five years, at 30% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like First Northwest Bancorp's Dividend

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 Northwest Bancorp that you should be aware of before investing. 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.