ESSA Bancorp (NASDAQ:ESSA) Will Pay A Dividend Of $0.15

The board of ESSA Bancorp, Inc. (NASDAQ:ESSA) has announced that it will pay a dividend on the 30th of June, with investors receiving $0.15 per share. This payment means that the dividend yield will be 4.2%, which is around the industry average.

View our latest analysis for ESSA Bancorp

ESSA Bancorp's Payment Expected To Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time.

ESSA Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on ESSA Bancorp's last earnings report, the payout ratio is at a decent 29%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 6.6%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 33%, which would be comfortable for the company to continue in the future.

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ESSA Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.60. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. ESSA Bancorp has seen EPS rising for the last five years, at 39% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

ESSA Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think ESSA Bancorp might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for ESSA Bancorp that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.

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