First Savings Financial Group (NASDAQ:FSFG) Has Announced That It Will Be Increasing Its Dividend To $0.16

First Savings Financial Group, Inc. (NASDAQ:FSFG) will increase its dividend on the 31st of March to $0.16, which is 6.7% higher than last year's payment from the same period of $0.15. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.

View our latest analysis for First Savings Financial Group

First Savings Financial Group's Earnings Will Easily Cover The Distributions

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

First Savings Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, First Savings Financial Group's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

The next year is set to see EPS grow by 4.0%. If the dividend continues along recent trends, we estimate the future payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

First Savings Financial Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was $0.147, compared to the most recent full-year payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 2.9% per year. While growth may be thin on the ground, First Savings Financial Group could always pay out a higher proportion of earnings to increase shareholder returns.

First Savings Financial Group Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for First Savings Financial Group that investors need to be conscious of moving forward. Is First Savings Financial Group 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.