First Commonwealth Financial (NYSE:FCF) Is Due To Pay A Dividend Of $0.135

First Commonwealth Financial Corporation (NYSE:FCF) has announced that it will pay a dividend of $0.135 per share on the 22nd of August. Based on this payment, the dividend yield will be 3.3%, which is fairly typical for the industry.

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

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, First Commonwealth Financial has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Commonwealth Financial's payout ratio of 40% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 19.9%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 37% by next year, which is in a pretty sustainable range.

Check out our latest analysis for First Commonwealth Financial

First Commonwealth Financial Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.28 in 2015 to the most recent total annual payment of $0.54. This means that it has been growing its distributions at 6.8% per annum 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.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. First Commonwealth Financial has seen EPS rising for the last five years, at 8.9% per annum. 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.

First Commonwealth Financial Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think First Commonwealth Financial might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 First Commonwealth Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.