First Commonwealth Financial (NYSE:FCF) Will Pay A Dividend Of $0.12

First Commonwealth Financial Corporation's (NYSE:FCF) investors are due to receive a payment of $0.12 per share on 18th of November. This payment means that the dividend yield will be 3.3%, which is around the industry average.

Our analysis indicates that FCF is potentially undervalued!

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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

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 35% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 37.9%. Analysts forecast the future payout ratio could be 29% over the same time horizon, which is a number we think the company can maintain.

First Commonwealth Financial Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that First Commonwealth Financial has been growing its earnings per share at 13% a year over the past five years. 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

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 7 First Commonwealth Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.