First Financial Bancorp (NASDAQ:FFBC) Will Pay A Dividend Of $0.23

First Financial Bancorp.'s (NASDAQ:FFBC) investors are due to receive a payment of $0.23 per share on 17th of June. Based on this payment, the dividend yield on the company's stock will be 4.1%, which is an attractive boost to shareholder returns.

Check out our latest analysis for First Financial Bancorp

First Financial Bancorp's Dividend Forecasted To Be Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

First Financial Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on First Financial Bancorp's last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 2.3%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 40%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

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Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the annual payment back then was $0.94, compared to the most recent full-year payment of $0.92. The dividend has shrunk at a rate of less than 1% a year over this period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Growth Potential

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that First Financial Bancorp has grown earnings per share at 5.1% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for First Financial Bancorp's prospects of growing its dividend payments in the future.

In Summary

Overall, we think First Financial Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for First Financial Bancorp (1 is concerning!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.