What To Know Before Buying New York Community Bancorp Inc (NYSE:NYCB) For Its Dividend
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, New York Community Bancorp Inc (NYSE:NYCB) has paid dividends to shareholders, and these days it yields 6.2%. Does New York Community Bancorp tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for New York Community Bancorp
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has it increased its dividend per share amount over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How well does New York Community Bancorp fit our criteria?
The current trailing twelve-month payout ratio for the stock is 78.3%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 80.1%, leading to a dividend yield of around 6.2%. In addition to this, EPS is forecasted to fall to $0.82 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from New York Community Bancorp fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, New York Community Bancorp generates a yield of 6.2%, which is high for Mortgage stocks.
Next Steps:
With this in mind, I definitely rank New York Community Bancorp as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for NYCB’s future growth? Take a look at our free research report of analyst consensus for NYCB’s outlook.
Valuation: What is NYCB 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 NYCB 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 editorial-team@simplywallst.com.
