U.S. Markets closed
  • S&P 500

    3,669.01
    +6.56 (+0.18%)
     
  • Dow 30

    29,883.79
    +59.87 (+0.20%)
     
  • Nasdaq

    12,349.37
    -5.74 (-0.05%)
     
  • Russell 2000

    1,838.03
    +1.98 (+0.11%)
     
  • Crude Oil

    44.89
    -0.39 (-0.86%)
     
  • Gold

    1,833.40
    +3.20 (+0.17%)
     
  • Silver

    24.17
    +0.09 (+0.35%)
     
  • EUR/USD

    1.2118
    +0.0040 (+0.3272%)
     
  • 10-Yr Bond

    0.9480
    +0.0140 (+1.50%)
     
  • Vix

    21.17
    +0.40 (+1.93%)
     
  • GBP/USD

    1.3370
    -0.0053 (-0.3971%)
     
  • USD/JPY

    104.4600
    +0.1440 (+0.1380%)
     
  • BTC-USD

    19,234.22
    +240.32 (+1.27%)
     
  • CMC Crypto 200

    376.17
    +11.25 (+3.08%)
     
  • FTSE 100

    6,463.39
    +78.66 (+1.23%)
     
  • Nikkei 225

    26,800.98
    +13.44 (+0.05%)
     

Why You Might Be Interested In Sound Financial Bancorp, Inc. (NASDAQ:SFBC) For Its Upcoming Dividend

Simply Wall St
·3 min read

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Sound Financial Bancorp, Inc. (NASDAQ:SFBC) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 4th of August will not receive the dividend, which will be paid on the 19th of August.

Sound Financial Bancorp's next dividend payment will be US$0.15 per share, on the back of last year when the company paid a total of US$0.60 to shareholders. Last year's total dividend payments show that Sound Financial Bancorp has a trailing yield of 2.1% on the current share price of $28.41. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Sound Financial Bancorp

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Sound Financial Bancorp is paying out just 23% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Sound Financial Bancorp paid out over the last 12 months.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Sound Financial Bancorp earnings per share are up 8.7% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sound Financial Bancorp has delivered 22% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

From a dividend perspective, should investors buy or avoid Sound Financial Bancorp? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating Sound Financial Bancorp more closely.

While it's tempting to invest in Sound Financial Bancorp for the dividends alone, you should always be mindful of the risks involved. For example - Sound Financial Bancorp has 3 warning signs we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.