Timberland Bancorp's (NASDAQ:TSBK) Upcoming Dividend Will Be Larger Than Last Year's

Timberland Bancorp, Inc. (NASDAQ:TSBK) will increase its dividend from last year's comparable payment on the 26th of May to $0.23. This takes the annual payment to 3.6% of the current stock price, which is about average for the industry.

See our latest analysis for Timberland Bancorp

Timberland Bancorp's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Timberland Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Timberland Bancorp's payout ratio sits at 13%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 8.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

Timberland Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.92. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Timberland Bancorp has impressed us by growing EPS at 8.7% per year over the past five years. Timberland Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Timberland Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Timberland Bancorp is a strong income stock thanks to its track record and growing earnings. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Timberland Bancorp management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.