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

The board of Northeast Community Bancorp, Inc. (NASDAQ:NECB) has announced that it will pay a dividend of $0.06 per share on the 4th of August. The dividend yield is 1.7% 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 Earnings Will Easily Cover The Distributions

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

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 11%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to fall by 16.4% over the next year. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 14%, which would be comfortable for the company to continue in the future.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2013, the annual payment back then was $0.0896, compared to the most recent full-year payment of $0.24. This means that it has been growing its distributions at 10% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Northeast Community Bancorp has impressed us by growing EPS at 36% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Northeast Community Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Northeast Community Bancorp might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've identified 2 warning signs for Northeast Community Bancorp (1 is significant!) 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.