Hanover Bancorp (NASDAQ:HNVR) Has Affirmed Its Dividend Of $0.10

Hanover Bancorp, Inc. (NASDAQ:HNVR) will pay a dividend of $0.10 on the 14th of May. Including this payment, the dividend yield on the stock will be 1.7%, which is a modest boost for shareholders' returns.

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Hanover Bancorp's Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Hanover Bancorp is just starting to establish itself as being able to pay dividends to shareholders, given its short 3-year history of distributing earnings. Based on Hanover Bancorp's last earnings report, calculating for its payout ratio equates to 30%, which means that the company covered its last dividend with comfortable room to spare.

Looking forward, earnings per share is forecast to rise by 46.8% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Hanover Bancorp

Hanover Bancorp Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The last annual payment of $0.40 was flat on the annual payment from3 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Hanover Bancorp hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Hanover Bancorp's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Hanover Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.

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. Taking the debate a bit further, we've identified 2 warning signs for Hanover Bancorp that investors need to be conscious of moving forward. Is Hanover 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.