Timberland Bancorp, Inc. (NASDAQ:TSBK) Looks Interesting, And It's About To Pay A Dividend

Timberland Bancorp, Inc. (NASDAQ:TSBK) is about to trade ex-dividend in the next two days. Investors can purchase shares before the 11th of February in order to be eligible for this dividend, which will be paid on the 26th of February.

Timberland Bancorp's next dividend payment will be US$0.31 per share. Last year, in total, the company distributed US$0.80 to shareholders. Looking at the last 12 months of distributions, Timberland Bancorp has a trailing yield of approximately 3.5% on its current stock price of $27.1. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Timberland Bancorp can afford its dividend, and if the dividend could grow.

View our latest analysis for Timberland Bancorp

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Timberland Bancorp paid out a comfortable 27% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Timberland Bancorp's earnings have been skyrocketing, up 20% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Timberland Bancorp has delivered 29% dividend growth per year on average over the past eight years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Is Timberland Bancorp worth buying for its dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, Timberland Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while Timberland Bancorp has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Timberland Bancorp has 3 warning signs we think you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

When trading Timberland Bancorp or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.