Sound Financial Bancorp (NASDAQ:SFBC) Is Due To Pay A Dividend Of $0.19

Sound Financial Bancorp, Inc. (NASDAQ:SFBC) will pay a dividend of $0.19 on the 26th of November. This means the annual payment will be 1.4% of the current stock price, which is lower than the industry average.

View our latest analysis for Sound Financial Bancorp

Sound Financial Bancorp's Earnings Will Easily Cover The Distributions

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

Sound Financial Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Sound Financial Bancorp's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS could fall by 9.8% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 62%, which is definitely feasible to continue.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was $0.20 in 2014, and the most recent fiscal year payment was $0.76. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year 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.

Dividend Growth May Be Hard To Come By

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Sound Financial Bancorp has seen earnings per share falling at 9.8% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Our Thoughts On Sound Financial Bancorp's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Sound Financial Bancorp's payments, as there could be some issues with sustaining them into the future. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Sound Financial Bancorp has been making. We don't think Sound Financial Bancorp is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 4 warning signs for Sound Financial Bancorp (1 is concerning!) that you should be aware of before investing. Is Sound Financial Bancorp 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.