Northeast Community Bancorp (NASDAQ:NECB) Will Pay A Dividend Of $0.06

Northeast Community Bancorp, Inc. (NASDAQ:NECB) has announced that it will pay a dividend of $0.06 per share on the 6th of February. The dividend yield is 1.6% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Northeast Community Bancorp

Northeast Community Bancorp's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Northeast Community Bancorp has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Northeast Community Bancorp's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 11.9%. Analysts estimate the future payout ratio will be 15% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. 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. Northeast Community Bancorp has seen EPS rising for the last five years, at 23% per annum. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Northeast Community Bancorp that investors need to be conscious of moving forward. 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.