Kentucky First Federal Bancorp (NASDAQ:KFFB) Will Pay A Dividend Of $0.10

The board of Kentucky First Federal Bancorp (NASDAQ:KFFB) has announced that it will pay a dividend on the 14th of November, with investors receiving $0.10 per share. This means the annual payment will be 5.4% of the current stock price, which is lower than the industry average.

View our latest analysis for Kentucky First Federal Bancorp

Kentucky First Federal Bancorp Not Expected To Earn Enough To Cover Its Payments

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

Having distributed dividends for at least 10 years, Kentucky First Federal Bancorp has a long history of paying out a part of its earnings to shareholders. But while this history shows that the company was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company did not make enough earnings to cover its dividend payout. This is an alarming sign for the sustainability of its dividends, as it may mean that Kentucky First Federal Bancorpis pulling cash from elsewhere to keep its shareholders happy.

Over the next year, EPS could expand by 11.7% if the company continues along the path it has been on recently. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 184% over the next year.

Kentucky First Federal Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The last annual payment of $0.40 was flat on the annual payment from10 years ago. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Kentucky First Federal Bancorp Might Find It Hard To Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Kentucky First Federal Bancorp has seen EPS rising for the last five years, at 12% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Kentucky First Federal Bancorp's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Kentucky First Federal Bancorp that investors should take into consideration. Is Kentucky First Federal 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.