Yahoo Finance First Hawaiian (NASDAQ:FHB) Has Announced A Dividend Of $0.26
The board of First Hawaiian, Inc. (NASDAQ:FHB) has announced that it will pay a dividend of $0.26 per share on the 31st of May. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.
See our latest analysis for First Hawaiian
First Hawaiian's Dividend Forecasted To Be Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
First Hawaiian has established itself as a dividend paying company, given its 8-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Hawaiian's payout ratio of 60% is a good sign for current shareholders as this means that earnings decently cover dividends.
Looking forward, earnings per share is forecast to rise by 5.3% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 60%, which is in the range that makes us comfortable with the sustainability of the dividend.
First Hawaiian Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of $0.80 in 2016 to the most recent total annual payment of $1.04. This means that it has been growing its distributions at 3.3% per annum over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. First Hawaiian has seen earnings per share falling at 2.4% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about First Hawaiian's payments, as there could be some issues with sustaining them into the future. While First Hawaiian is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for First Hawaiian 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.
