Timberland Bancorp (NASDAQ:TSBK) Is Due To Pay A Dividend Of US$0.21

The board of Timberland Bancorp, Inc. (NASDAQ:TSBK) has announced that it will pay a dividend of US$0.21 per share on the 26th of November. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Timberland Bancorp

Timberland Bancorp's Earnings Easily Cover the Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Timberland Bancorp's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 17.3% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

Timberland Bancorp Doesn't Have A Long Payment History

Timberland Bancorp's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2012, the first annual payment was US$0.12, compared to the most recent full-year payment of US$0.84. This works out to be a compound annual growth rate (CAGR) of approximately 24% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Timberland Bancorp has seen EPS rising for the last five years, at 17% per annum. Timberland Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Timberland Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Timberland Bancorp might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Timberland Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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