HarborOne Bancorp (NASDAQ:HONE) Is Paying Out A Dividend Of $0.08

HarborOne Bancorp, Inc. (NASDAQ:HONE) has announced that it will pay a dividend of $0.08 per share on the 24th of July. This payment means that the dividend yield will be 2.9%, which is around the industry average.

See our latest analysis for HarborOne Bancorp

HarborOne Bancorp's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

HarborOne Bancorp has a short history of paying out dividends, with its current track record at only 4 years. Diving into the company's earnings report, the payout ratio is set at 81%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.

Earnings per share is forecast to rise by 39.5% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio could reach 78%, which is on the higher side, but certainly still feasible.

HarborOne Bancorp Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of $0.12 in 2020 to the most recent total annual payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

HarborOne Bancorp Might Find It Hard To Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. HarborOne Bancorp has impressed us by growing EPS at 14% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We don't think HarborOne Bancorp is a great stock to add to your portfolio if income is your focus.

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 3 warning signs for HarborOne Bancorp that investors need to be conscious of moving forward. Is HarborOne 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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