Territorial Bancorp (NASDAQ:TBNK) Is Paying Out A Dividend Of $0.23
Territorial Bancorp Inc. (NASDAQ:TBNK) has announced that it will pay a dividend of $0.23 per share on the 23rd of November. Including this payment, the dividend yield on the stock will be 4.9%, which is a modest boost for shareholders' returns.
See our latest analysis for Territorial Bancorp
Territorial Bancorp's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
Having distributed dividends for at least 10 years, Territorial Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Territorial Bancorp's last earnings report, the payout ratio is at a decent 49%, meaning that the company is able to pay out its dividend with a bit of room to spare.
EPS is set to fall by 21.3% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 61% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of $0.36 in 2012 to the most recent total annual payment of $1.02. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
Territorial Bancorp May Find It Hard To Grow The Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Unfortunately, Territorial Bancorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. Growth of 0.6% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.
Our Thoughts On Territorial Bancorp's Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Territorial Bancorp you should be aware of, and 1 of them makes us a bit uncomfortable. If you are a dividend investor, you might also want to look at our curated list of high yield 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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