Sound Financial Bancorp, Inc. (NASDAQ:SFBC) will pay a dividend of $0.17 on the 23rd of August. The dividend yield is 2.1% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Sound Financial Bancorp

Sound Financial Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Sound Financial Bancorp has a good history of paying out dividends, with its current track record at 9 years. While past data isn't a guarantee for the future, Sound Financial Bancorp's latest earnings report puts its payout ratio at 23%, showing that the company can pay out its dividends comfortably.

If the trend of the last few years continues, EPS will grow by 5.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 28% by next year, which is in a pretty sustainable range.

Sound Financial Bancorp Doesn't Have A Long Payment History

It is great to see that Sound Financial Bancorp has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 9 years was $0.20 in 2013, and the most recent fiscal year payment was $0.78. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

We Could See Sound Financial Bancorp's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Sound Financial Bancorp has been growing its earnings per share at 5.6% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, we think Sound Financial Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Sound Financial Bancorp that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.