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

Kentucky First Federal Bancorp (NASDAQ:KFFB) will pay a dividend of $0.10 on the 20th of November. This means the annual payment is 8.5% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Kentucky First Federal Bancorp

Kentucky First Federal Bancorp Will Pay Out More Than It Is Earning

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Kentucky First Federal Bancorp has established itself as a dividend paying company with over 10 years history of distributing 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 very worrying for shareholders, as this shows that Kentucky First Federal Bancorp will not be able to sustain its dividend at its current rate.

EPS is set to fall by 6.1% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 369%, which is definitely a bit high to be sustainable going forward.

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 payments haven't really changed that much since 10 years ago. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Dividend Growth Is Doubtful

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Kentucky First Federal Bancorp has seen earnings per share falling at 6.1% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. 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. As an example, we've identified 3 warning signs for Kentucky First Federal Bancorp that you should be aware of before investing. 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.