Kearney Financial Corporation (NASDAQ:KRNY) pays a dividend of $0.11 on November 20th. The dividend yield based on this payment is 6.5%, which is still above the industry average.
Check out our latest analysis for Kearny Financial.
We like to see solid dividend yields, but we don’t mind if the payments aren’t sustainable.
Kearney Financial has a good history of paying dividends, with a current track record spanning nine years. Unfortunately, past dividends are no guarantee of future dividends, and Kearney Financial’s last earnings report actually showed that the company’s total dividends exceeded its net income. This is a worrying sign for dividend sustainability, as it could mean Kearney Financial is pulling cash elsewhere to keep shareholders happy.
EPS is expected to grow by 138.6% over the next 12 months. If dividends continue in line with recent trends, it is predicted that the future payout ratio could reach 95%, which is high, but still certainly achievable.
historic dividend
Kearney Financial has been paying dividends for a while, but its track record isn’t all that great. This makes us cautious about dividend consistency across business cycles. Since 2015, dividends have totaled $0.08 to $0.44 per year. This works out to be a compound annual growth rate (CAGR) of approximately 21% over that period. Dividends have grown rapidly during this time, but with a history of dividend cuts, we’re not sure if this stock will be a reliable source of income in the future.
Given that the dividend has been cut in the past, we need to see if earnings are growing, and if that could lead to dividend increases in the future. Earnings per share have declined by 29% over the past five years. Dividend payments may come under some pressure unless EPS can break out of its current precipitous decline. However, it’s not all bad news. Profits are expected to grow over the next 12 months, so we’ll be a bit cautious until then. It will be a long-term trend.
Overall, it’s great to see stable dividend payments, but we think the current payout levels may become unsustainable in the long term. The track record is not very good and the payments are a bit high to be considered sustainable. If you value income, Kearney Financial doesn’t seem like a good stock to add to your portfolio.
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It’s important to note that companies with a consistent dividend policy generate greater investor confidence than companies with an erratic dividend policy. On the other hand, despite the importance of dividends, they are not the only factor that our readers need to know when evaluating a company. For example, we’ve picked 1 warning sign for Kearney Financial that investors should consider. Looking for more high-yield dividend ideas? Check out our collection of high-yield stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
