First Financial Bancorp (NASDAQ:FFBC) Will Pay A Dividend Of $0.24

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.

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First Financial Bancorp’s Earnings Will Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

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. Taking data from its last earnings report, calculating for the company’s payout ratio shows 39%, which means that First Financial Bancorp would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 7.3%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 39% by next year, which is in a pretty sustainable range.

See our latest analysis for First Financial Bancorp

First Financial Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.64 total annually to $0.96. This means that it has been growing its distributions at 4.1% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See First Financial Bancorp’s Dividend Growing

Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. It’s encouraging to see that First Financial Bancorp has been growing its earnings per share at 5.4% a year over the past five years. 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.

We Really Like First Financial Bancorp’s Dividend

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

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 picked out 1 warning sign for First Financial Bancorp that investors should know about before committing capital to this stock. 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.