Provident Financial Holdings (NASDAQ:PROV) Is Paying Out A Dividend Of $0.14

Provident Financial Holdings, Inc. (NASDAQ:PROV) has announced that it will pay a dividend of $0.14 per share on the 7th of March. The dividend yield is 3.9% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Provident Financial Holdings

Provident Financial Holdings' Earnings Will Easily Cover The Distributions

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

Provident Financial Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Provident Financial Holdings' payout ratio of 47% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 11.4%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 43% by next year, which is in a pretty sustainable range.

Provident Financial Holdings Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.16 in 2013, and the most recent fiscal year payment was $0.56. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Provident Financial Holdings has been growing its earnings per share at 53% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Provident Financial Holdings could prove to be a strong dividend payer.

Provident Financial Holdings Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Provident Financial Holdings in our latest insider ownership analysis. 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.