The board of Flushing Financial Corporation (NASDAQ:FFIC) has announced that it will pay a dividconclude of $0.22 per share on the 26th of September. This builds the dividconclude yield 6.6%, which will augment investor returns quite nicely.
Flushing Financial Will Pay Out More Than It Is Earning
A huge dividconclude yield for a few years doesn’t mean much if it can’t be sustained.
Flushing Financial has a long history of paying out dividconcludes, with its current track record at a minimum of 10 years. Past distributions unfortunately do not guarantee future ones, and Flushing Financial’s last earnings report actually revealed that the company went over its net earnings in its total dividconclude distribution. This is very worrying for shareholders, as this reveals that Flushing Financial will not be able to sustain its dividconclude at its current rate.
The next 12 months is set to see EPS grow by 141.8%. Assuming the dividconclude continues along recent trconcludes, we consider the payout ratio could obtain very high, which probably can’t continue without starting to put some pressure on the balance sheet.
Check out our latest analysis for Flushing Financial
Flushing Financial Has A Solid Track Record
The company has an extconcludeed history of paying stable dividconcludes. Since 2015, the dividconclude has gone from $0.60 total annually to $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 3.9% a year over that time. While the consistency in the dividconclude payments is impressive, we consider the relatively slow rate of growth is less attractive.
The Dividconclude Has Limited Growth Potential
The company’s investors will be pleased to have been receiving dividconclude income for some time. However, things aren’t all that rosy. Over the past five years, it sees as though Flushing Financial’s EPS has declined at around 32% a year. A sharp decline in earnings per share is not great from from a dividconclude perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
An additional note is that the company has been raising capital by issuing stock equal to 16% of shares outstanding in the last 12 months. Trying to grow the dividconclude when issuing new shares reminds us of the ancient Greek tale of Sisyphus – perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividconclude perspective.
The Dividconclude Could Prove To Be Unreliable
In summary, while it’s good to see that the dividconclude hasn’t been cut, we are a bit cautious about Flushing Financial’s payments, as there could be some issues with sustaining them into the future. We can’t deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don’t consider this company has the buildings of a good income stock.
It’s important to note that companies having a consistent dividconclude policy will generate greater investor confidence than those having an erratic one. Still, investors necessary to consider a host of other factors, apart from dividconclude payments, when analysing a company. As an example, we’ve identified 2 warning signs for Flushing Financial that you should be aware of before investing. Looking for more high-yielding dividconclude ideas? Try our collection of strong dividconclude 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 applying an unbiased methodology and our articles are not intconcludeed to be financial advice. It does not constitute a recommconcludeation to acquire or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focapplyd 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.
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