The board of First Financial Bancorp. (NASDAQ:FFBC) has announced that it will pay a dividend of $0.24 per share on the 16th of June. This means the annual payment is 4.0% of the current stock price, which is above the average for the industry.
We’ve discovered 1 warning sign about First Financial Bancorp. View them for free.
A big dividend yield for a few years doesn’t mean much if it can’t be sustained.
Having distributed dividends for at least 10 years, First Financial Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Financial Bancorp’s payout ratio of 39% is a good sign as this means that earnings decently cover dividends.
Over the next year, EPS is forecast to expand by 7.3%. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for First Financial Bancorp
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.64 in 2015 to the most recent total annual payment of $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The company’s investors will be pleased to have been receiving dividend income for some time. First Financial Bancorp has seen EPS rising for the last five years, at 5.4% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for First Financial Bancorp’s prospects of growing its dividend payments in the future.
Overall, we like to see the dividend staying consistent, and we think First Financial Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 Financial Bancorp that you should be aware of before investing. Is First Financial Bancorp 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.
