Northeast Community Bancorp (NASDAQ:NECB) Has Announced A Dividend Of $0.06

Northeast Community Bancorp, Inc.'s (NASDAQ:NECB) investors are due to receive a payment of $0.06 per share on 15th of November. Including this payment, the dividend yield on the stock will be 1.9%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Northeast Community Bancorp

Northeast Community Bancorp's Payment Expected To Have Solid Earnings Coverage

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

Northeast Community Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 37%, which means that Northeast Community Bancorp would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to rise by 35.3% over the next year. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2012, the annual payment back then was $0.0896, compared to the most recent full-year payment of $0.24. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. Northeast Community Bancorp has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Northeast Community Bancorp has been growing its earnings per share at 24% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Northeast Community Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Northeast Community Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Northeast Community 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.