The Community Financial Corporation's (NASDAQ:TCFC) investors are due to receive a payment of $0.175 per share on 24th of April. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

View our latest analysis for Community Financial

Community Financial's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having distributed dividends for at least 10 years, Community Financial has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Community Financial's payout ratio sits at 14%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, EPS is forecast to rise by 10.0% over the next 3 years. Analysts estimate the future payout ratio will be 15% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Community Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.40 in 2013 to the most recent total annual payment of $0.70. This means that it has been growing its distributions at 5.8% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Community Financial has grown earnings per share at 26% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Community Financial's Dividend

Overall, we like to see the dividend staying consistent, and we think Community Financial might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Community Financial stock. Is Community Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.