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Hanover Bancorp, Inc.'s (NASDAQ:HNVR) investors are due to receive a payment of $0.10 per share on 14th of August. This payment means the dividend yield will be 2.4%, which is below the average for the industry.
View our latest analysis for Hanover Bancorp
Hanover Bancorp's Dividend Forecasted To Be Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Hanover Bancorp has a short history of paying out dividends, with its current track record at only 2 years. While it has a shorter history of paying out dividends, Hanover Bancorp's payout ratio of 20% is a great sign for current shareholders, as this means that earnings greatly cover dividends.
The next year is set to see EPS grow by 12.2%. If the dividend continues on this path, the future payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.
Hanover Bancorp Doesn't Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The last annual payment of $0.40 was flat on the annual payment from2 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.
Hanover Bancorp May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. In the last five years, Hanover Bancorp's earnings per share has shrunk at approximately 2.6% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. 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 Hanover Bancorp's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Hanover Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would probably look elsewhere for an income investment.
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 1 warning sign for Hanover Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.