The Community Financial Corporation (NASDAQ:TCFC) will pay a dividend of $0.175 on the 24th of April. The dividend yield is 2.1% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Community Financial

Community Financial's Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Community Financial has a long history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 14% also shows that Community Financial is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 10.0% over the next 3 years. Analysts forecast the future payout ratio could be 15% over the same time horizon, which is a number we think the company can maintain.

Community Financial 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 dividend has gone from an annual total of $0.40 in 2013 to the most recent total annual payment of $0.70. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Community Financial has seen EPS rising for the last five years, at 26% per annum. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Community Financial Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in Community Financial in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.