First Northwest Bancorp's (NASDAQ:FNWB) investors are due to receive a payment of $0.07 per share on 25th of August. This payment means the dividend yield will be 2.1%, which is below the average for the industry.
View our latest analysis for First Northwest Bancorp
First Northwest Bancorp's Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
First Northwest Bancorp has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Using data from its latest earnings report, First Northwest Bancorp's payout ratio sits at 16%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 16.0% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 24%, which we are pretty comfortable with and we think would be feasible on an earnings basis.
First Northwest Bancorp Is Still Building Its Track Record
First Northwest Bancorp's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 5 years was $0.12 in 2018, and the most recent fiscal year payment was $0.28. This means that it has been growing its distributions at 18% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that First Northwest Bancorp has grown earnings per share at 31% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
We Really Like First Northwest Bancorp's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.