Back to top

Image: Bigstock

Waterstone (WSBF) Cuts Dividend to Improve Capital Allocation

Read MoreHide Full Article

As part of its strategy to augment capital distribution and shareholder value, Waterstone Financial, Inc. (WSBF - Free Report) slashed the quarterly dividend by 25%. The dividend of 15 cents per share will be paid out on Nov 1 to shareholders on record as of Oct 9.

This step aims to improve shareholder value through share repurchases, which will lead to “long-term benefits” for both the company and its shareholders. WSBF plans to reallocate reduced dividends to buy back shares at price levels that remain below tangible book value per share.

Based on yesterday’s closing price, this reduced current dividend yield is 5.37%. This is still impressive compared with the industry average of 3.27%.

Douglas Gordon, CEO of Waterstone Financial, said, “Reallocating capital towards stock buybacks is a prudent strategic move, given the current market dynamics and our strong financial position.”

Apart from steady capital distribution through dividend payouts and repurchases, Waterstone Financial maintains a capital-to-assets ratio of 15.9% (well above the regulatory requirements) as of Jun 30, 2023. Given the ambiguity related to the interest rate path and economic backdrop, maintaining robust capital levels is a must.

In May 2023, WSBF had authorized 2 million shares under a new buyback program. As of Jun 30, 2023, 1.88 million shares remained available. This plan has no expiration date. That time, the company terminated its previous plan, under which it repurchased 3.5 million shares at a weighted average price (including the excise tax) of $17.25 per share.

Given the solid balance sheet and liquidity position, WSBF will likely be able to sustain steady capital distributions and maintain robust capital levels.

Shares of Waterstone Financial have lost 25.9% in the past six months compared with industry’s fall of 9.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Currently, WSBF carries a Zacks Rank #4 (Sell).

Bank Stocks Worth a Look

A couple of better-ranked stocks in the banking space are ESSA Bancorp (ESSA - Free Report) and The Bancorp (TBBK - Free Report) .

The consensus estimate for ESSA Bancorp’s current-year earnings has been unchanged in the past 30 days. In the past six months, shares of ESSA have declined 2.1%. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past six months, TBBK’s shares have gained 20.1%. The consensus estimate for The Bancorp’s current-year earnings has been unchanged over the past 30 days. The company also currently carries a Zacks Rank #2.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

The Bancorp, Inc. (TBBK) - free report >>

Waterstone Financial, Inc. (WSBF) - free report >>

ESSA Bancorp, Inc. (ESSA) - free report >>

Published in