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It looks like Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) is about to go ex-dividend in the next 3 days. If you purchase the stock on or after the 24th of January, you won't be eligible to receive this dividend, when it is paid on the 10th of February.
Home Federal Bancorp of Louisiana's next dividend payment will be US$0.16 per share, and in the last 12 months, the company paid a total of US$0.64 per share. Based on the last year's worth of payments, Home Federal Bancorp of Louisiana has a trailing yield of 1.8% on the current stock price of $35.01. If you buy this business for its dividend, you should have an idea of whether Home Federal Bancorp of Louisiana's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Home Federal Bancorp of Louisiana is paying out just 21% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Home Federal Bancorp of Louisiana's earnings per share have been growing at 16% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Home Federal Bancorp of Louisiana has delivered an average of 10% per year annual increase in its dividend, based on the past ten years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Is Home Federal Bancorp of Louisiana an attractive dividend stock, or better left on the shelf? Companies like Home Federal Bancorp of Louisiana that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Home Federal Bancorp of Louisiana looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Want to learn more about Home Federal Bancorp of Louisiana? Here's a visualisation of its historical rate of revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.