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Readers hoping to buy Washington Federal, Inc. (NASDAQ:WAFD) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Washington Federal's shares on or after the 19th of May, you won't be eligible to receive the dividend, when it is paid on the 3rd of June.
The company's next dividend payment will be US$0.24 per share, and in the last 12 months, the company paid a total of US$0.96 per share. Looking at the last 12 months of distributions, Washington Federal has a trailing yield of approximately 3.1% on its current stock price of $30.75. If you buy this business for its dividend, you should have an idea of whether Washington Federal's dividend is reliable and sustainable. So we need to investigate whether Washington Federal can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Washington Federal
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Washington Federal has a low and conservative payout ratio of just 17% of its income after tax.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Washington Federal earnings per share are up 9.5% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Washington Federal has lifted its dividend by approximately 15% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.