Provident Financial Holdings' (NASDAQ:PROV) Dividend Will Be $0.14

The board of Provident Financial Holdings, Inc. (NASDAQ:PROV) has announced that it will pay a dividend on the 6th of March, with investors receiving $0.14 per share. This payment means that the dividend yield will be 3.5%, which is around the industry average.

View our latest analysis for Provident Financial Holdings

Provident Financial Holdings' Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Provident Financial Holdings has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Provident Financial Holdings' payout ratio of 62% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 20.9% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 52% by next year, which is in a pretty sustainable range.

Provident Financial Holdings Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was $0.40, compared to the most recent full-year payment of $0.56. This implies that the company grew its distributions at a yearly rate of about 3.4% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

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 have grown at around 4.2% a year for the past five years, which isn't massive but still better than seeing them shrink. Growth of 4.2% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.

Provident Financial Holdings Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Provident Financial Holdings might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Provident Financial Holdings stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend 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 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.