Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) will pay a dividend of $0.13 on the 12th of May. This payment means that the dividend yield will be 3.9%, which is around the industry average.

Our free stock report includes 2 warning signs investors should be aware of before investing in Home Federal Bancorp of Louisiana. Read for free now.

Home Federal Bancorp of Louisiana's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Home Federal Bancorp of Louisiana has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Home Federal Bancorp of Louisiana's payout ratio of 47% is a good sign as this means that earnings decently cover dividends.

Unless the company can turn things around, EPS could fall by 1.9% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio could be 55%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

View our latest analysis for Home Federal Bancorp of Louisiana

Home Federal Bancorp of Louisiana Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $0.14 total annually to $0.52. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Home Federal Bancorp of Louisiana May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Unfortunately, Home Federal Bancorp of Louisiana's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Home Federal Bancorp of Louisiana's Dividend

Overall, we think Home Federal Bancorp of Louisiana is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Home Federal Bancorp of Louisiana has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.