Flushing Financial (NASDAQ:FFIC) Is Increasing Its Dividend To US$0.22

The board of Flushing Financial Corporation (NASDAQ:FFIC) has announced that the dividend on 25th of March will be increased to US$0.22, which will be 4.8% higher than last year. This will take the dividend yield from 3.6% to 3.6%, providing a nice boost to shareholder returns.

View our latest analysis for Flushing Financial

Flushing Financial's Earnings Easily Cover the Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Flushing Financial was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 8.0% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 36%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Flushing Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from US$0.52 in 2012 to the most recent annual payment of US$0.84. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Flushing Financial May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Flushing Financial has only grown its earnings per share at 3.7% per annum over the past five years. While growth may be thin on the ground, Flushing Financial could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Flushing Financial's Dividend

Overall, a dividend increase is always good, and we think that Flushing Financial is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Flushing Financial (of which 1 is potentially serious!) you should know about. 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.