FirstCash Holdings Inc's Dividend Analysis

FirstCash Holdings Inc's Dividend Analysis

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Assessing the Sustainability and Growth of FCFS's Dividends

FirstCash Holdings Inc (NASDAQ:FCFS) recently announced a dividend of $0.35 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into FirstCash Holdings Inc's dividend performance and assess its sustainability.

What Does FirstCash Holdings Inc Do?

FirstCash Holdings Inc operates pawn stores in the United States and Latin America. Its primary business involves making small loans secured by personal property. The company has three reportable segments: U.S. pawn; Latin America pawn; and Retail POS payment solutions (AFF). It derives majority revenue from U.S. Pawn segment. These pawn loans give the borrower the option of either repaying the loans with interest or forfeiting the property without further penalty. Close to 30% of total company revenue comes from interest earned on the loans. Close to 70% of total revenue comes from reselling forfeited property in the company's retail stores.

FirstCash Holdings Inc's Dividend Analysis
FirstCash Holdings Inc's Dividend Analysis

A Glimpse at FirstCash Holdings Inc's Dividend History

FirstCash Holdings Inc has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down FirstCash Holdings Inc's Dividend Yield and Growth

As of today, FirstCash Holdings Inc currently has a 12-month trailing dividend yield of 1.15% and a 12-month forward dividend yield of 1.18%. This suggests an expectation of increased dividend payments over the next 12 months.

Over the past three years, FirstCash Holdings Inc's annual dividend growth rate was 8.00%. Extended to a five-year horizon, this rate increased to 8.10% per year. Based on FirstCash Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of FirstCash Holdings Inc stock as of today is approximately 1.71%.

FirstCash Holdings Inc's Dividend Analysis
FirstCash Holdings Inc's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, FirstCash Holdings Inc's dividend payout ratio is 0.22.