Regular readers know that we love Simply Wall Street Dividends. First Financial Bankshares Co., Ltd. (NASDAQ:FFIN) is scheduled to trade ex-dividend in the next four days. The ex-dividend date is one business day before the company's record date, which is the date on which the company determines which shareholders are entitled to receive the dividend. It is important to be aware of the ex-dividend date, as stock trades must be settled on or before the record date. Therefore, an investor in First Financial Bank stock who purchased the stock after March 14th will not receive the dividend, which will be paid to him on April 1st.
The company's next dividend payment will be $0.18 per share, and in the last 12 months, the company paid a total of $0.72 per share. Based on the last year's worth of payments, First Financial Bancshares has a yield of 2.2% on the current stock price of $32.57. Dividends are an important source of income for many shareholders, but the health of the business is critical to maintaining dividends. That's why we should always check whether the dividend payments are sustainable, and if the company is growing.
Check out our latest analysis for First Financial Bankshares.
Dividends are typically paid out of company profits, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. First Financial Bankshare paid out more than half (51%) of its profit last year, which is a normal dividend rate for most companies.
Generally, the lower a company's payout ratio, the more resilient its dividend is.
Click here to see the company's payout ratio and analyst estimates of its future dividends.
Are profits and dividends growing?
Stocks in companies that generate sustainable earnings growth often offer the best dividend prospects, since it's easier to lift dividends when earnings are rising. Investors love dividends, so if earnings fall and the dividend is cut, you can expect the stock to sell off heavily at the same time. That's why we're relieved to see First Financial Bankshare's earnings per share have grown 4.7% per year over the past five years.
The main way most investors assess a company's dividend prospects is by looking at its historical dividend growth rate. Over the past decade, First Financial Bancshares has raised its dividend by an average of about 11% per year. It's encouraging to see the company raising its dividend amid growing profits, suggesting that the company has at least some interest in rewarding shareholders.
conclusion
Is First Financial Bank stock an attractive dividend stock, or should it be left on the shelf? Earnings per share are growing at a reasonable rate, and the company pays out just over half of its profits as dividends. We are not convinced by the company's merits and think there may be better opportunities.
Curious about what the future holds for First Financial Bankshares? See what the 5 analysts we track are predicting by visualizing past and future expected earnings and cash flow.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
