The board of Northeast Community Bancorp, Inc. (NASDAQ:NECB) has announced that it will be increasing its dividend by 67% on the 6th of May to $0.10, up from last year's comparable payment of $0.06. Despite this raise, the dividend yield of 1.6% is only a modest boost to shareholder returns.

Check out our latest analysis for Northeast Community Bancorp

Northeast Community Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Having distributed dividends for at least 10 years, Northeast Community Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Northeast Community Bancorp's payout ratio sits at 7.2%, an extremely comfortable number that shows that it can pay its dividend.

EPS is set to fall by 40.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 16% over the same time period, which we think the company can easily maintain.

Northeast Community Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.0896 in 2014, and the most recent fiscal year payment was $0.24. This means that it has been growing its distributions at 10% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Northeast Community Bancorp has impressed us by growing EPS at 36% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Northeast Community Bancorp Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Northeast Community Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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