Heritage Financial Corporation (NASDAQ:HFWA) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 4th of May in order to receive the dividend, which the company will pay on the 19th of May.

Heritage Financial’s next dividend payment will be US$0.20 per share, and in the last 12 months, the company paid a total of US$0.80 per share. Calculating the last year’s worth of payments shows that Heritage Financial has a trailing yield of 2.8% on the current share price of $28.11. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Heritage Financial has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Heritage Financial

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. Heritage Financial paid out a comfortable 48% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

NasdaqGS:HFWA Historic Dividend April 29th 2021

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. This is why it’s a relief to see Heritage Financial earnings per share are up 5.8% per annum 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. Heritage Financial has delivered 21% dividend growth per year on average over the past 10 years. 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.

Final Takeaway

Has Heritage Financial got what it takes to maintain its dividend payments? Heritage Financial 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. In summary, Heritage Financial appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.

On that note, you’ll want to research what risks Heritage Financial is facing. For instance, we’ve identified 3 warning signs for Heritage Financial (1 can’t be ignored) you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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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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Originally Appeared On: https://simplywall.st/stocks/us/banks/nasdaq-hfwa/heritage-financial/news/heres-what-we-like-about-heritage-financials-nasdaqhfwa-upco