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IF Bancorp (NASDAQ:IROQ) Has Announced That It Will Be Increasing Its Dividend To $0.20

·3-min read

The board of IF Bancorp, Inc. (NASDAQ:IROQ) has announced that it will be increasing its dividend by 14% on the 14th of October to $0.20, up from last year's comparable payment of $0.175. This takes the annual payment to 1.8% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for IF Bancorp

IF Bancorp's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

IF Bancorp has a good history of paying out dividends, with its current track record at 9 years. While past records don't necessarily translate into future results, the company's payout ratio of 19% also shows that IF Bancorp is able to comfortably pay dividends.

Over the next year, EPS could expand by 9.5% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

historic-dividend
historic-dividend

IF Bancorp Doesn't Have A Long Payment History

It is great to see that IF Bancorp has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2013, the annual payment back then was $0.10, compared to the most recent full-year payment of $0.35. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. IF Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

IF Bancorp Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that IF Bancorp has been growing its earnings per share at 9.5% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

IF Bancorp Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for IF Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.

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