ESSA Bancorp (NASDAQ:ESSA) Has Affirmed Its Dividend Of $0.15

The board of ESSA Bancorp, Inc. (NASDAQ:ESSA) has announced that it will pay a dividend on the 29th of September, with investors receiving $0.15 per share. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

See our latest analysis for ESSA Bancorp

ESSA Bancorp's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

ESSA Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but ESSA Bancorp's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to fall by 6.0%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 34%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

ESSA Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.60. This means that it has been growing its distributions at 12% 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 Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. ESSA Bancorp has impressed us by growing EPS at 32% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

ESSA Bancorp Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 1 warning sign for ESSA Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.