HarborOne Bancorp's (NASDAQ:HONE) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of HarborOne Bancorp, Inc. (NASDAQ:HONE) has announced that the dividend on 24th of April will be increased to $0.08, which will be 6.7% higher than last year's payment of $0.075 which covered the same period. This makes the dividend yield about the same as the industry average at 3.1%.

Check out our latest analysis for HarborOne Bancorp

HarborOne Bancorp's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

HarborOne Bancorp is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Based on HarborOne Bancorp's last earnings report, calculating for its payout ratio equates to 81%, which means that the company covered its last dividend with comfortable room to spare.

Looking forward, EPS is forecast to rise by 152.4% over the next 3 years. For the same time horizon, analysts estimate that the future payout ratio could be 39% which would be quite comfortable going to take the dividend forward.

HarborOne Bancorp Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2020, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.30. This means that it has been growing its distributions at 26% 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.

HarborOne Bancorp Might Find It Hard To Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. HarborOne Bancorp has seen EPS rising for the last five years, at 13% per annum. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think HarborOne Bancorp's payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. This company is not in the top tier of income providing stocks.

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. For example, we've picked out 3 warning signs for HarborOne Bancorp that investors should know about before committing capital to this stock. 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.