Timberland Bancorp, Inc. (NASDAQ:TSBK) will increase its dividend from last year's comparable payment on the 23rd of May to $0.26. Based on this payment, the dividend yield for the company will be 3.5%, which is fairly typical for the industry.

We check all companies for important risks. See what we found for Timberland Bancorp in our free report.

Timberland Bancorp's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Timberland Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Timberland Bancorp's last earnings report, the payout ratio is at a decent 30%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 2.6% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 34%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Timberland Bancorp

Timberland Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.20 total annually to $1.04. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. 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's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 2.6% per year. While growth may be thin on the ground, Timberland Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Timberland Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Is Timberland Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.