Timberland Bancorp's (NASDAQ:TSBK) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Timberland Bancorp, Inc. (NASDAQ:TSBK) has announced that it will be paying its dividend of $0.23 on the 24th of February, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 2.8%.

Check out our latest analysis for Timberland Bancorp

Timberland Bancorp's Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

Timberland Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Timberland Bancorp's last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 9.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 34% by next year, which is in a pretty sustainable range.

Timberland Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.12 total annually to $0.92. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Timberland Bancorp has seen EPS rising for the last five years, at 9.0% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Timberland Bancorp's prospects of growing its dividend payments in the future.

We Really Like Timberland Bancorp's Dividend

Overall, a dividend increase is always good, and we think that Timberland Bancorp is a strong income stock thanks to its track record and growing earnings. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Timberland Bancorp that investors need to be conscious of moving forward. Is Timberland Bancorp 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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