HarborOne Bancorp (NASDAQ:HONE) Will Pay A Dividend Of $0.08

The board of HarborOne Bancorp, Inc. (NASDAQ:HONE) has announced that it will pay a dividend of $0.08 per share on the 14th of January. This payment means that the dividend yield will be 2.6%, which is around the industry average.

Check out our latest analysis for HarborOne Bancorp

HarborOne Bancorp's Dividend Forecasted To Be Well Covered By Earnings

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. Past distributions unfortunately do not guarantee future ones, and HarborOne Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is worrying for investors as it points to HarborOne Bancorp's dividends being unsustainable in the long term.

According to analysts, EPS should be several times higher in the next 3 years. They also expect the future payout ratio to be 35% over the same period, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.

HarborOne Bancorp Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2020, the dividend has gone from $0.12 total annually to $0.32. This means that it has been growing its distributions at 28% per annum 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.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 2.2% a year for the past five years, which isn't massive but still better than seeing them shrink. So the company has struggled to grow its EPS yet it's still paying out 115% of its earnings. As they say in finance, 'past performance is not indicative of future performance', but we are not confident a company with limited earnings growth and a high payout ratio will be a star dividend-payer over the next decade.

Our Thoughts On HarborOne Bancorp's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. 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.