WSFS Financial (NASDAQ:WSFS) Is Increasing Its Dividend To $0.15
WSFS Financial Corporation's (NASDAQ:WSFS) dividend will be increasing from last year's payment of the same period to $0.15 on 19th of August. Despite this raise, the dividend yield of 1.3% is only a modest boost to shareholder returns.
Check out our latest analysis for WSFS Financial
WSFS Financial's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
WSFS Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 17% also shows that WSFS Financial is able to comfortably pay dividends.
Over the next 3 years, EPS is forecast to expand by 52.0%. The future payout ratio could be 11% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
WSFS Financial Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.16 in 2012, and the most recent fiscal year payment was $0.60. This means that it has been growing its distributions at 14% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
WSFS Financial May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, WSFS Financial has only grown its earnings per share at 3.7% per annum over the past five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
We should note that WSFS Financial has issued stock equal to 36% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
We Really Like WSFS Financial's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 3 warning signs for WSFS Financial that investors should know about before committing capital to this stock. Is WSFS Financial not quite the opportunity you were looking for? Why not check out our selection of top 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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