We Wouldn't Be Too Quick To Buy Kentucky First Federal Bancorp (NASDAQ:KFFB) Before It Goes Ex-Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Kentucky First Federal Bancorp (NASDAQ:KFFB) is about to go ex-dividend in just 4 days. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Kentucky First Federal Bancorp's shares before the 27th of April to receive the dividend, which will be paid on the 15th of May.

The company's next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Calculating the last year's worth of payments shows that Kentucky First Federal Bancorp has a trailing yield of 6.3% on the current share price of $6.3704. 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.

View our latest analysis for Kentucky First Federal Bancorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year, Kentucky First Federal Bancorp paid out 254% of its profit to shareholders in the form of dividends. This is not sustainable behaviour and requires a closer look on behalf of the purchaser.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Kentucky First Federal Bancorp, with earnings per share up 7.1% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Kentucky First Federal Bancorp's dividend payments are broadly unchanged compared to where they were 10 years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid Kentucky First Federal Bancorp? Kentucky First Federal Bancorp has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that being said, if you're still considering Kentucky First Federal Bancorp as an investment, you'll find it beneficial to know what risks this stock is facing. Every company has risks, and we've spotted 3 warning signs for Kentucky First Federal Bancorp you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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