First Commonwealth Financial (NYSE:FCF) Is Due To Pay A Dividend Of $0.125

First Commonwealth Financial Corporation (NYSE:FCF) has announced that it will pay a dividend of $0.125 per share on the 23rd of February. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

View our latest analysis for First Commonwealth Financial

First Commonwealth Financial's Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

First Commonwealth Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on First Commonwealth Financial's last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to fall by 4.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 36% over the same time period, which we think the company can easily maintain.

First Commonwealth Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.50. This works out to be a compound annual growth rate (CAGR) of approximately 7.6% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See First Commonwealth Financial'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 Commonwealth Financial has seen EPS rising for the last five years, at 7.3% per annum. First Commonwealth Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like First Commonwealth Financial'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. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for First Commonwealth Financial (1 can't be ignored!) that you should be aware of before investing. Is First Commonwealth Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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