Nasdaq-Listed Companies

Why It Might Not Make Sense To Buy Kentucky First Federal Bancorp (NASDAQ:KFFB) For Its Upcoming Dividend

Readers hoping to buy Kentucky First Federal Bancorp (NASDAQ:KFFB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Kentucky First Federal Bancorp's shares on or after the 29th of July, you won't be eligible to receive the dividend, when it is paid on the 25th of August.

The company's next dividend payment will be US$0.10 per share, and in the last 12 months, the company paid a total of US$0.40 per share. Based on the last year's worth of payments, Kentucky First Federal Bancorp stock has a trailing yield of around 5.7% on the current share price of $7.0427. If you buy this business for its dividend, you should have an idea of whether Kentucky First Federal Bancorp's dividend is reliable and sustainable. So we need to investigate whether Kentucky First Federal Bancorp can afford its dividend, and if the dividend could grow.

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kentucky First Federal Bancorp reported a loss last year, so it's not great to see that it has continued paying a dividend.

Click here to see how much of its profit Kentucky First Federal Bancorp paid out over the last 12 months.

historic-dividendNasdaqGM:KFFB Historic Dividend July 24th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Kentucky First Federal Bancorp was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Kentucky First Federal Bancorp dividends are largely the same as they were 10 years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

The Bottom Line

From a dividend perspective, should investors buy or avoid Kentucky First Federal Bancorp? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Although, if you're still interested in Kentucky First Federal Bancorp and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 3 warning signs for Kentucky First Federal Bancorp (1 makes us a bit uncomfortable!) that deserve your attention before investing in the shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

KFFB

Latest Nasdaq-Listed Companies Videos

    Outset Medical Celebrates Its One-Year Anniversary as a Nasdaq-Listed Company

    Outset Medical CEO Leslie Trigg discusses how dialysis has evolved into effective home treatment as Outset celebrates its one-year anniversary as a Nasdaq-listed company.

    5 days ago

    Simply Wall St

    We help you make informed decisions by giving you access to institutional quality data and analysis presented visually.

    Learn More