BankFinancial's (NASDAQ:BFIN) Dividend Will Be $0.10

BankFinancial Corporation (NASDAQ:BFIN) will pay a dividend of $0.10 on the 23rd of May. This payment means that the dividend yield will be 3.3%, which is around the industry average.

Our free stock report includes 2 warning signs investors should be aware of before investing in BankFinancial. Read for free now.

BankFinancial's Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

BankFinancial has a long history of paying out dividends, with its current track record at a minimum of 10 years. But while this history shows that the company was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company did not make enough earnings to cover its dividend payout. This is an alarming sign for the sustainability of its dividends, as it may mean that BankFinancialis pulling cash from elsewhere to keep its shareholders happy.

Earnings per share is forecast to rise by 40.7% over the next year. Assuming the dividend continues along recent trends, our estimates say the future payout ratio could reach 88% - on the higher side, but we wouldn't necessarily say this is unsustainable.

View our latest analysis for BankFinancial

BankFinancial Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.08 in 2015, and the most recent fiscal year payment was $0.40. This means that it has been growing its distributions at 17% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. BankFinancial's EPS has fallen by approximately 12% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

BankFinancial's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for BankFinancial that investors should take into consideration. Is BankFinancial 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.