Yahoo Finance FirstCash Holdings (NASDAQ:FCFS) Is Increasing Its Dividend To $0.38
FirstCash Holdings, Inc. (NASDAQ:FCFS) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of August to $0.38. Even though the dividend went up, the yield is still quite low at only 1.4%.
Check out our latest analysis for FirstCash Holdings
FirstCash Holdings' Payment Has 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. However, FirstCash Holdings' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 20.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.
FirstCash Holdings Is Still Building Its Track Record
It is great to see that FirstCash Holdings has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 9 years was $0.50 in 2015, and the most recent fiscal year payment was $1.52. This means that it has been growing its distributions at 13% 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.
FirstCash Holdings Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. FirstCash Holdings has seen EPS rising for the last five years, at 7.7% per annum. FirstCash Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Our Thoughts On FirstCash Holdings' Dividend
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for FirstCash Holdings that investors need to be conscious of moving forward. 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.
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