Northeast Community Bancorp (NASDAQ:NECB) Will Pay A Larger Dividend Than Last Year At $0.10

Northeast Community Bancorp, Inc.'s (NASDAQ:NECB) periodic dividend will be increasing on the 6th of May to $0.10, with investors receiving 67% more than last year's $0.06. Despite this raise, the dividend yield of 1.6% is only a modest boost to shareholder returns.

View our latest analysis for Northeast Community Bancorp

Northeast Community Bancorp's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Northeast Community Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 7.2% also shows that Northeast Community Bancorp is able to comfortably pay dividends.

EPS is set to fall by 40.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 16% over the same time period, which we think the company can easily maintain.

Northeast Community Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, 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. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Northeast Community Bancorp has grown earnings per share at 36% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Northeast Community Bancorp's Dividend

Overall, a dividend increase is always good, and we think that Northeast Community Bancorp is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. 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. Is Northeast Community Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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