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Should You Buy Washington Federal (WAFD) for Higher Dividend?
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Washington Federal (WAFD - Free Report) has announced a dividend hike. The company declared a quarterly cash dividend of 25 cents per share, reflecting a rise of 4.2% from the prior payout. The dividend will be paid out on Mar 10 to shareholders of record as of Feb 24.
Since this announcement earlier this week, shares of WAFD have gained 1.6%.
Prior to the current hike, the company increased its dividend by 4.2% to 24 cents per share in January 2022. WAFD raised its quarterly dividend seven times in the last five years. Also, it has a five-year annualized dividend growth of 7.6%. Currently, the company's payout ratio is 25% of earnings.
Considering the last day’s closing price of $37.13, Washington Federal’s dividend yield currently stands at 2.63%, which is impressive compared with the industry average of 2.32%.
Apart from the regular dividend payments, WAFD has a share repurchase program in place, as of Dec 31, 2022, it had 3.68 million shares remaining under the buyback authorization.
The company intends to enhance multi-family loan origination capabilities and expand commercial banking activities to Northern and Southern California. Hence, in November 2022, the company announced a deal to acquire Luther Burbank for $654 million, thus, entering the lucrative California market. These activities are expected to enhance shareholder value over time.
Investors are always on the lookout for companies with a record of consistent and incremental dividend payments. Thus, solid dividend payouts are arguably the biggest enticement for investors.
But before deciding whether to buy the WAFD stock, let’s check out its financial performance and fundamentals, which will help us understand the risks and rewards.
Washington Federal has witnessed earnings growth of 5.85% over the past three to five years. The company’s earnings are expected to grow 30.7% this year. Further, in the last 30 days, the Zacks Consensus Estimate for the company’s fiscal 2023 earnings have been revised 4.2% upward. This shows that analysts are bullish regarding the company’s earnings growth potential.
WAFD’s revenues witnessed a CAGR of 6.4% over the last six fiscal years (2017-2022), mainly driven by improving net loan balances. The company’s revenues are expected to grow 18.5% this year and 2.52% in fiscal 2024.
With the Federal Reserve raising interest rates and such hikes expected in the near term, Washington Federal’s net interest margin is likely to keep improving in the quarters ahead.
As of Dec 31, 2022, Washington Federal had total debt worth $3.08 billion, and cash and cash equivalents worth $645.9 million. Nevertheless, its times interest earned ratio of 9.5 at the end of first-quarter fiscal 2023 reflects year-over-year improvement. Thus, given the company’s decent earnings strength, it is expected to continue meeting debt obligations in the near term, even if the economic situation worsens.
However, persistently increasing expenses and higher provisions are near-term headwinds that make us apprehensive.
Dividend Hikes by Other Banks
Bank OZK (OZK - Free Report) announced a cash dividend of 34 cents per share, marking a 3.03% increase from its prior payout. The dividend was paid out on Jan 24 to shareholders of record as of Jan 17.
This represents the 50th consecutive quarter of dividend hike by Bank OZK. Prior to this, OZK hiked its dividend by 3.1% to 33 cents per share in October 2022.
Cadence Bank (CADE - Free Report) announced a cash dividend of 23.5 cents per share, which represents an increase 6.8% from the previous dividend payout. The dividend will be paid out on Apr 3 to shareholders of record as of Mar 15, 2023.
Prior to this, CADE hiked its dividend 9.1% to 24 cents per share in October 2022.
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Should You Buy Washington Federal (WAFD) for Higher Dividend?
Washington Federal (WAFD - Free Report) has announced a dividend hike. The company declared a quarterly cash dividend of 25 cents per share, reflecting a rise of 4.2% from the prior payout. The dividend will be paid out on Mar 10 to shareholders of record as of Feb 24.
Since this announcement earlier this week, shares of WAFD have gained 1.6%.
Prior to the current hike, the company increased its dividend by 4.2% to 24 cents per share in January 2022. WAFD raised its quarterly dividend seven times in the last five years. Also, it has a five-year annualized dividend growth of 7.6%. Currently, the company's payout ratio is 25% of earnings.
Considering the last day’s closing price of $37.13, Washington Federal’s dividend yield currently stands at 2.63%, which is impressive compared with the industry average of 2.32%.
Washington Federal, Inc. Dividend Yield (TTM)
Washington Federal, Inc. dividend-yield-ttm | Washington Federal, Inc. Quote
Apart from the regular dividend payments, WAFD has a share repurchase program in place, as of Dec 31, 2022, it had 3.68 million shares remaining under the buyback authorization.
The company intends to enhance multi-family loan origination capabilities and expand commercial banking activities to Northern and Southern California. Hence, in November 2022, the company announced a deal to acquire Luther Burbank for $654 million, thus, entering the lucrative California market. These activities are expected to enhance shareholder value over time.
Investors are always on the lookout for companies with a record of consistent and incremental dividend payments. Thus, solid dividend payouts are arguably the biggest enticement for investors.
But before deciding whether to buy the WAFD stock, let’s check out its financial performance and fundamentals, which will help us understand the risks and rewards.
Washington Federal has witnessed earnings growth of 5.85% over the past three to five years. The company’s earnings are expected to grow 30.7% this year. Further, in the last 30 days, the Zacks Consensus Estimate for the company’s fiscal 2023 earnings have been revised 4.2% upward. This shows that analysts are bullish regarding the company’s earnings growth potential.
WAFD’s revenues witnessed a CAGR of 6.4% over the last six fiscal years (2017-2022), mainly driven by improving net loan balances. The company’s revenues are expected to grow 18.5% this year and 2.52% in fiscal 2024.
With the Federal Reserve raising interest rates and such hikes expected in the near term, Washington Federal’s net interest margin is likely to keep improving in the quarters ahead.
As of Dec 31, 2022, Washington Federal had total debt worth $3.08 billion, and cash and cash equivalents worth $645.9 million. Nevertheless, its times interest earned ratio of 9.5 at the end of first-quarter fiscal 2023 reflects year-over-year improvement. Thus, given the company’s decent earnings strength, it is expected to continue meeting debt obligations in the near term, even if the economic situation worsens.
Shares of this Zacks Rank #2 (Buy) company have rallied 5.4% over the past six months against the industry’s decline of 13.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
However, persistently increasing expenses and higher provisions are near-term headwinds that make us apprehensive.
Dividend Hikes by Other Banks
Bank OZK (OZK - Free Report) announced a cash dividend of 34 cents per share, marking a 3.03% increase from its prior payout. The dividend was paid out on Jan 24 to shareholders of record as of Jan 17.
This represents the 50th consecutive quarter of dividend hike by Bank OZK. Prior to this, OZK hiked its dividend by 3.1% to 33 cents per share in October 2022.
Cadence Bank (CADE - Free Report) announced a cash dividend of 23.5 cents per share, which represents an increase 6.8% from the previous dividend payout. The dividend will be paid out on Apr 3 to shareholders of record as of Mar 15, 2023.
Prior to this, CADE hiked its dividend 9.1% to 24 cents per share in October 2022.