IF Bancorp (NASDAQ:IROQ) Is Paying Out A Dividend Of $0.20

The board of IF Bancorp, Inc. (NASDAQ:IROQ) has announced that it will pay a dividend on the 17th of October, with investors receiving $0.20 per share. This payment means the dividend yield will be 1.6%, which is below the average for the industry.

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IF Bancorp's Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, IF Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but IF Bancorp's payout ratio of 38% is a good sign as this means that earnings decently cover dividends.

Unless the company can turn things around, EPS could fall by 3.6% over the next year. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 46%, which we are pretty comfortable with and we think is feasible on an earnings basis.

View our latest analysis for IF Bancorp

IF Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.10 in 2015 to the most recent total annual payment of $0.40. This means that it has been growing its distributions at 15% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though IF Bancorp's EPS has declined at around 3.6% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Our Thoughts On IF Bancorp's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. Just as an example, we've come across 2 warning signs for IF Bancorp you should be aware of, and 1 of them is potentially serious. 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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