First Financial Northwest, Inc. (NASDAQ:FFNW) Looks Interesting, And It's About To Pay A Dividend

First Financial Northwest, Inc. (NASDAQ:FFNW) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 3rd of September in order to receive the dividend, which the company will pay on the 18th of September.

First Financial Northwest's next dividend payment will be US$0.10 per share. Last year, in total, the company distributed US$0.40 to shareholders. Based on the last year's worth of payments, First Financial Northwest stock has a trailing yield of around 4.3% on the current share price of $9.25. If you buy this business for its dividend, you should have an idea of whether First Financial Northwest's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for First Financial Northwest

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see First Financial Northwest paying out a modest 42% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at First Financial Northwest, with earnings per share up 4.6% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, First Financial Northwest has increased its dividend at approximately 1.6% a year on average.

The Bottom Line

Is First Financial Northwest worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, First Financial Northwest appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while First Financial Northwest has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for First Financial Northwest that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

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