WSFS Financial's (NASDAQ:WSFS) Shareholders Will Receive A Bigger Dividend Than Last Year

WSFS Financial Corporation (NASDAQ:WSFS) will increase its dividend from last year's comparable payment on the 19th of August to $0.15. Even though the dividend went up, the yield is still quite low at only 1.3%.

View our latest analysis for WSFS Financial

WSFS Financial's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

WSFS Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, WSFS Financial's latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.

The next 3 years are set to see EPS grow by 52.0%. Analysts estimate the future payout ratio will be 11% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

WSFS Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.16, compared to the most recent full-year payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 3.7% per year. While growth may be thin on the ground, WSFS Financial could always pay out a higher proportion of earnings to increase shareholder returns.

We should note that WSFS Financial has issued stock equal to 36% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like WSFS Financial's Dividend

Overall, a dividend increase is always good, and we think that WSFS Financial 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.

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 example, we've picked out 3 warning signs for WSFS Financial that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.