Why You Might Be Interested In Northeast Community Bancorp, Inc. (NASDAQ:NECB) For Its Upcoming Dividend

By
Simply Wall St
Published
May 08, 2022
NasdaqCM:NECB
Source: Shutterstock

Northeast Community Bancorp, Inc. (NASDAQ:NECB) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Northeast Community Bancorp's shares on or after the 13th of May, you won't be eligible to receive the dividend, when it is paid on the 31st of May.

The company's next dividend payment will be US$0.18 per share, on the back of last year when the company paid a total of US$0.24 to shareholders. Calculating the last year's worth of payments shows that Northeast Community Bancorp has a trailing yield of 2.2% on the current share price of $10.96. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Northeast Community Bancorp

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Northeast Community Bancorp paid out a comfortable 32% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Northeast Community Bancorp paid out over the last 12 months.

historic-dividend
NasdaqCM:NECB Historic Dividend May 8th 2022

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Northeast Community Bancorp has grown its earnings rapidly, up 21% a year for the past five years.

We'd also point out that Northeast Community Bancorp issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Northeast Community Bancorp has lifted its dividend by approximately 10% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

From a dividend perspective, should investors buy or avoid Northeast Community Bancorp? Companies like Northeast Community Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Northeast Community Bancorp more closely.

On that note, you'll want to research what risks Northeast Community Bancorp is facing. Our analysis shows 1 warning sign for Northeast Community Bancorp and you should be aware of it before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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