First Savings Financial Group (NASDAQ:FSFG) Could Be A Buy For Its Upcoming Dividend
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It looks like First Savings Financial Group, Inc. (NASDAQ:FSFG) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase First Savings Financial Group's shares on or after the 14th of March will not receive the dividend, which will be paid on the 31st of March.
The company's next dividend payment will be US$0.16 per share. Last year, in total, the company distributed US$0.60 to shareholders. Looking at the last 12 months of distributions, First Savings Financial Group has a trailing yield of approximately 2.4% on its current stock price of US$24.66. If you buy this business for its dividend, you should have an idea of whether First Savings Financial Group's dividend is reliable and sustainable. So we need to investigate whether First Savings Financial Group can afford its dividend, and if the dividend could grow.
View our latest analysis for First Savings Financial Group
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. First Savings Financial Group paid out just 22% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
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.
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 earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at First Savings Financial Group, with earnings per share up 3.4% on average over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, First Savings Financial Group has lifted its dividend by approximately 15% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Should investors buy First Savings Financial Group for the upcoming dividend? First Savings Financial Group has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating First Savings Financial Group more closely.
So while First Savings Financial Group looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for First Savings Financial Group you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.
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