A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Northfield Bancorp Inc (Staten Island NY) (NASDAQ:NFBK) has been paying a dividend to shareholders. Today it yields 2.6%. Let’s dig deeper into whether Northfield Bancorp (Staten Island NY) should have a place in your portfolio.
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How does Northfield Bancorp (Staten Island NY) fare?
The current trailing twelve-month payout ratio for the stock is 63%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect NFBK’s payout to fall to 48% of its earnings, which leads to a dividend yield of around 2.6%. However, EPS should increase to $0.86, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Although NFBK’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Northfield Bancorp (Staten Island NY) has a yield of 2.6%, which is on the low-side for Mortgage stocks.
With these dividend metrics in mind, I definitely rank Northfield Bancorp (Staten Island NY) as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for NFBK’s future growth? Take a look at our free research report of analyst consensus for NFBK’s outlook.
- Valuation: What is NFBK worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether NFBK is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.