Oconee Federal Financial (NASDAQ:OFED) Is Due To Pay A Dividend Of $0.10

The board of Oconee Federal Financial Corp. (NASDAQ:OFED) has announced that it will pay a dividend of $0.10 per share on the 23rd of November. Including this payment, the dividend yield on the stock will be 1.6%, which is a modest boost for shareholders' returns.

View our latest analysis for Oconee Federal Financial

Oconee Federal Financial's Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having distributed dividends for at least 10 years, Oconee Federal Financial has a long history of paying out a part of its earnings to shareholders. Based on Oconee Federal Financial's last earnings report, the payout ratio is at a decent 55%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Unless the company can turn things around, EPS could fall by 5.6% over the next year. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 58%, which is definitely feasible to continue.

Oconee Federal Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The last annual payment of $0.40 was flat on the annual payment from10 years ago. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Come By

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. It's not great to see that Oconee Federal Financial's earnings per share has fallen at approximately 5.6% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

In Summary

Overall, a consistent dividend is a good thing, and we think that Oconee Federal Financial has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Oconee Federal Financial that you should be aware of before investing. Is Oconee Federal Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.