Washington Federal (NASDAQ:WAFD) Is Increasing Its Dividend To US$0.24

Washington Federal, Inc. (NASDAQ:WAFD) will increase its dividend on the 18th of February to US$0.24. Despite this raise, the dividend yield of 2.7% is only a modest boost to shareholder returns.

See our latest analysis for Washington Federal

Washington Federal's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Washington Federal's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 16.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.

Washington Federal Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from US$0.24 in 2012 to the most recent annual payment of US$0.96. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Washington Federal's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Washington Federal has grown earnings per share at 8.1% per year over the past five years. Washington Federal definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Washington Federal Looks Like A Great Dividend Stock

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

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Washington Federal that investors should take into consideration. We have also put together a list of global stocks with a solid dividend.

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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.