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Heritage Financial (NASDAQ:HFWA) Has Announced A Dividend Of $0.21

Heritage Financial Corporation (NASDAQ:HFWA) has announced that it will pay a dividend of $0.21 per share on the 17th of August. This payment means that the dividend yield will be 3.3%, which is around the industry average.

See our latest analysis for Heritage Financial

Heritage Financial’s Dividend Forecasted To Be Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Heritage Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Heritage Financial’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.

The next 3 years are set to see EPS grow by 12.4%. Analysts forecast the future payout ratio could be 35% over the same time horizon, which is a number we think the company can maintain.

historic-dividend

historic-dividend

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 2012, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.84. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Has Growth Potential

With a relatively unstable dividend, it’s even more important to see if earnings per share is growing. We are encouraged to see that Heritage Financial has grown earnings per share at 9.7% per year over the past five years. Heritage Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Heritage Financial’s Dividend

In summary, it is good to see that the dividend is staying consistent, and we don’t think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we’ve identified 2 warning signs for Heritage Financial that you should be aware of before investing. Is Heritage Financial not quite the opportunity you were looking for? Why not check out 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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