Territorial Bancorp (NASDAQ:TBNK) Is Paying Out A Dividend Of $0.23
Territorial Bancorp Inc.'s (NASDAQ:TBNK) investors are due to receive a payment of $0.23 per share on 25th of August. This makes the dividend yield 9.1%, which will augment investor returns quite nicely.
View our latest analysis for Territorial Bancorp
Territorial Bancorp Will Pay Out More Than It Is Earning
A big dividend yield for a few years doesn't mean much if it can't be sustained.
Having distributed dividends for at least 10 years, Territorial Bancorp has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 73%, which means that Territorial Bancorp would be able to pay its last dividend without pressure on the balance sheet.
EPS is set to fall by 42.4% over the next 12 months. And if the dividend continues along the path it has been on recently, the future payout ratio in 12 months could be 145%, which is definitely a bit high to be sustainable going forward.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.48 in 2013, and the most recent fiscal year payment was $1.02. This means that it has been growing its distributions at 7.8% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Territorial Bancorp might have put its house in order since then, but we remain cautious.
Dividend Growth Is Doubtful
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Over the past five years, it looks as though Territorial Bancorp's EPS has declined at around 5.5% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.
Territorial Bancorp's Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Territorial Bancorp has been making. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Territorial Bancorp (1 makes us a bit uncomfortable!) 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.
