Exploring the Dividend Performance and Sustainability of TFS Financial Corp (TFSL, Financial)
TFS Financial Corp (TFSL) recently announced a dividend of $0.28 per share, scheduled for payment on June 25, 2024, with the ex-dividend date set for June 11, 2024. As investors anticipate this upcoming payment, it is crucial to delve into the company's dividend history, yield, and growth rates. This analysis utilizes data from GuruFocus to evaluate the performance and sustainability of dividends offered by TFS Financial Corp.
Overview of TFS Financial Corp
TFS Financial Corp is the parent entity for the Third Federal Savings and Loan Association of Cleveland, primarily engaged in originating and servicing residential real estate mortgage loans and attracting retail savings deposits through competitive rates and yields. It also operates Third Capital, a subsidiary involved in investments ranging from private equity funds to commercial building leases and reinsurance of private mortgage insurance on residential loans.
TFS Financial Corp's Dividend Track Record
Since 2014, TFS Financial Corp has consistently paid dividends, distributing them quarterly. The company has not only maintained these payments but has also increased them annually, earning it the status of a dividend achiever—a title awarded to companies that have raised their dividends annually for at least ten consecutive years.
Below is a graphical representation of the annual Dividends Per Share to illustrate historical trends.
Analyzing Dividend Yield and Growth
Currently, TFS Financial Corp boasts a trailing twelve-month dividend yield of 9.16% and a forward dividend yield of 9.16%, indicating stable dividend expectations over the next year. Over the past three years, the annual dividend growth rate was 0.60%, which expanded to 6.80% per annum over a five-year period. Consequently, the 5-year yield on cost for TFS Financial Corp stock is approximately 12.73%.
Evaluating Dividend Sustainability
To determine the sustainability of its dividend, TFS Financial Corp's dividend payout ratio is a critical metric. As of March 31, 2024, the payout ratio stands at 4.19, suggesting a potentially unsustainable dividend if the company does not retain sufficient earnings for future growth and stability. Additionally, the company's profitability rank is 5 out of 10, indicating moderate profitability with consistent positive net income over the past decade.
Future Growth Prospects
TFS Financial Corp's growth metrics are essential for maintaining dividend sustainability. Its growth rank is 5 out of 10, reflecting average growth prospects. Despite a modest 1.00% average annual increase in revenue, this performance is weaker than approximately 77.45% of global competitors. Additionally, the company's 3-year EPS growth rate has decreased by an average of -3.60% per year, underperforming 83.26% of global competitors. The 5-year EBITDA growth rate also lags behind, at -2.60%.
Conclusion
While TFS Financial Corp has a commendable record of consistent and increasing dividend payments, the sustainability of these dividends hinges on improved profitability and growth metrics. Investors should monitor these factors closely to make informed decisions about the long-term viability of their investments in TFSL. For further research, GuruFocus Premium users can explore high-dividend yield stocks using our screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
