Provident Financial Holdings, Inc. (NASDAQ:PROV) will pay a dividend of $0.14 on the 4th of September. Based on this payment, the dividend yield will be 3.6%, which is fairly typical for the industry.

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Provident Financial Holdings' Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Provident Financial Holdings has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 58%, which means that Provident Financial Holdings would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 16.0%. If the dividend continues on this path, the future payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Provident Financial Holdings

Provident Financial Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.44 total annually to $0.56. This implies that the company grew its distributions at a yearly rate of about 2.4% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Provident Financial Holdings hasn't seen much change in its earnings per share over the last five years. Growth of 1.5% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Provident Financial Holdings' Dividend

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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