Kentucky First Federal Bancorp (NASDAQ:KFFB) Has Affirmed Its Dividend Of $0.10
The board of Kentucky First Federal Bancorp (NASDAQ:KFFB) has announced that it will pay a dividend of $0.10 per share on the 20th of November. This means the annual payment is 8.5% of the current stock price, which is above the average for the industry.
Check out our latest analysis for Kentucky First Federal Bancorp
Kentucky First Federal Bancorp Not Expected To Earn Enough To Cover Its Payments
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Having distributed dividends for at least 10 years, Kentucky First Federal Bancorp has a long history of paying out a part of its earnings to shareholders. Despite this history however, the company's latest earnings report actually shows that it didn't have enough earnings to cover its dividends. This is very worrying for shareholders, as this shows that Kentucky First Federal Bancorp will not be able to sustain its dividend at its current rate.
EPS is set to fall by 6.1% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could reach 369%, which could put the dividend in jeopardy if the company's earnings don't improve.
Kentucky First Federal Bancorp Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. There hasn't been much of a change in the dividend over the last 10 years. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Dividend Growth May Be Hard To Come By
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. It's not great to see that Kentucky First Federal Bancorp's earnings per share has fallen at approximately 6.1% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
Kentucky First Federal Bancorp's Dividend Doesn't Look Sustainable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kentucky First Federal Bancorp's payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 3 warning signs for Kentucky First Federal 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.
