Flushing Financial Corporation (NASDAQ:FFIC) will pay a dividend of $0.22 on the 20th of December. The dividend yield will be 4.8% based on this payment which is still above the industry average.

View our latest analysis for Flushing Financial

Flushing Financial's Payment Expected To Have Solid Earnings Coverage

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

Flushing Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Despite this history however, the company's latest earnings report actually shows that it didn't have enough earnings to cover its dividends. This is very worrying for shareholders, as this shows that Flushing Financial will not be able to sustain its dividend at its current rate.

Looking forward, EPS is forecast to rise by 110.3% over the next 3 years. Despite the current payout ratio being slightly elevated, analysts estimate the future payout ratio will be 61% over the same time period, which would make us comfortable with the sustainability of the dividend.

Flushing Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $0.60 total annually to $0.88. This implies that the company grew its distributions at a yearly rate of about 3.9% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Flushing Financial has seen earnings per share falling at 8.9% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Flushing Financial's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Flushing Financial's payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would be a touch cautious of relying on this stock primarily for the dividend income.