Kentucky First Federal Bancorp's (NASDAQ:KFFB) Dividend Will Be $0.10
The board of Kentucky First Federal Bancorp (NASDAQ:KFFB) has announced that it will pay a dividend on the 24th of August, with investors receiving $0.10 per share. Based on this payment, the dividend yield on the company's stock will be 6.5%, which is an attractive boost to shareholder returns.
See our latest analysis for Kentucky First Federal Bancorp
Kentucky First Federal Bancorp Not Expected To Earn Enough To Cover Its Payments
A big dividend yield for a few years doesn't mean much if it can't be sustained.
Kentucky First Federal Bancorp has established itself as a dividend paying company with over 10 years history of distributing 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.
Looking forward, EPS could fall by 5.8% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the future payout ratio could reach 313%, 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. The most recent annual payment of $0.40 is about the same as the annual payment 10 years ago. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Dividend Growth Is Doubtful
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Kentucky First Federal Bancorp has seen earnings per share falling at 5.8% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.
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. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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. Is Kentucky First Federal 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.
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