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The board of Timberland Bancorp, Inc. (NASDAQ:TSBK) has announced that it will pay a dividend on the 28th of February, with investors receiving $0.25 per share. The payment will take the dividend yield to 3.3%, which is in line with the average for the industry.
Check out our latest analysis for Timberland Bancorp
Timberland Bancorp's Dividend Forecasted To Be Well Covered By Earnings
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Timberland Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Timberland Bancorp's payout ratio of 31% is a good sign as this means that earnings decently cover dividends.
If the trend of the last few years continues, EPS will grow by 0.8% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.
Timberland Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was $0.16, compared to the most recent full-year payment of $1.00. This means that it has been growing its distributions at 20% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend's Growth Prospects Are Limited
Investors could be attracted to the stock based on the quality of its payment history. However, Timberland Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Timberland Bancorp has the option to increase the payout ratio to return more cash to shareholders.
We Really Like Timberland Bancorp's Dividend
Overall, a dividend increase is always good, and we think that Timberland Bancorp is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Timberland Bancorp management tenure, salary, and performance. Is Timberland Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.