Washington Federal Hikes Dividend - Analyst Blog
December 20 2011 - 12:04PM
Zacks
On Monday, Washington Federal Inc. (WFSL)
announced a 33% increase in its quarterly cash dividend to 8 cents
per share. The new dividend will be paid on January 13, 2012 to the
stockholders of record as of December 30, 2011.
This is the second dividend rise for Washington Federal since
the end of the recent financial crisis. Before this, the company
had increased its quarterly dividend by 1 cent per share to 6 cents
in December 2010.
However, in midst of the financial crisis, Washington Federal
had to bring down its quarterly dividend. In late 2008, the company
shrunk its dividend from 21 cents per share to 5 cents. The company
then continued to pay this dividend for the next two years.
Furthermore, Washington Federal is also quite active when it
comes to boosting its shareholders’ wealth through share
repurchases. For the fiscal year ending September 30, 2011, the
company bought back 3,804,800 shares at an average price of $15.68
per share. The company still has an authorization to repurchase up
to an additional 9,083,514 shares, as of September 30, 2011.
Though dividend rise is a very encouraging step, we must look at
other aspects as well before giving a thumbs up to Washington
Federal for boosting shareholders value. First thing that should be
taken into consideration is the dividend yield (annual dividend per
share/stock’s price per share) and the other one is the dividend
payout ratio (annual dividend per share/annual earnings per
share).
The company’s previous had a dividend yield of 1.84%. With
dividend increasing to 8 cents, the dividend yield increases to
2.45%. As Washington Federal’s share price has remained stable over
the last 90 days, yield did not increase due to price rise, leading
to the conclusion that the shareholders will actually be benefited
from a dividend hike.
On the other hand, the company’s payout ratio stood at 24% when
its previous annual dividend was 24 cents. For fiscal 2012,
considering the Zacks Consensus Estimate of $1.27 per share and the
increased dividend, the payout ratio is expected to be 25%. An
almost stable payout ratio signifies improved shareholder
value.
Therefore, we believe that this dividend rise will definitely
increase the confidence level of the shareholders in Washington
Federal’s earnings.
Washington Federal currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. One of the peers of the
company, Astoria Financial Corporation (AF)
retains a Zacks #4 Rank (short-term Sell rating).
ASTORIA FINL CP (AF): Free Stock Analysis Report
WASH FEDL INC (WFSL): Free Stock Analysis Report
Zacks Investment Research
Washington Federal, Inc. (MM) (NASDAQ:WFSL)
Historical Stock Chart
From Nov 2024 to Dec 2024
Washington Federal, Inc. (MM) (NASDAQ:WFSL)
Historical Stock Chart
From Dec 2023 to Dec 2024