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

It looks like First Financial Bankshares, Inc. (NASDAQ:FFIN) is about to go ex-dividend in the next four days. If you purchase the stock on or after the 15th of September, you won't be eligible to receive this dividend, when it is paid on the 1st of October.

First Financial Bankshares's next dividend payment will be US$0.13 per share. Last year, in total, the company distributed US$0.52 to shareholders. Looking at the last 12 months of distributions, First Financial Bankshares has a trailing yield of approximately 1.8% on its current stock price of $29.53. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for First Financial Bankshares

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see First Financial Bankshares paying out a modest 39% 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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see First Financial Bankshares's earnings per share have risen 13% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. First Financial Bankshares has delivered an average of 8.7% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Has First Financial Bankshares got what it takes to maintain its dividend payments? Companies like First Financial Bankshares that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, First Financial Bankshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, First Financial Bankshares has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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