Magyar Bancorp (NASDAQ:MGYR) Will Pay A Dividend Of $0.03

Magyar Bancorp, Inc. (NASDAQ:MGYR) will pay a dividend of $0.03 on the 23rd of February. This payment means the dividend yield will be 1.6%, which is below the average for the industry.

See our latest analysis for Magyar Bancorp

Magyar Bancorp's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Given that this is the first year that Magyar Bancorp is paying out a dividend, we are not yet able to make an analysis based on the company's dividend paying history. While this gives us less confidence in Magyar Bancorp's long-term dividend potential, the company's payout ratio of 10%is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Looking forward, earnings per share could rise by 42.6% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 12% by next year, which is in a pretty sustainable range.

Magyar Bancorp Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Magyar Bancorp has seen EPS rising for the last five years, at 43% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Magyar Bancorp's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Magyar 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.