TFS Financial (TFSL) Announces 25% Hike In Dividend

Last week, TFS Financial Corporation’s (NASDAQ:TFSL) Board of Directors approved a 25% increase in the company’s quarterly dividend to12.5 cents per share. The dividend will be paid on Sep 19, to stockholders of record as on Sep 6. Based on last closing price, the stock reflects a dividend yield of 2.32%.

Notably, TFS Financial also stated that its mutual holding company, Third Federal Savings and Loan Association of Cleveland, MHC, that owns 80% of the company’s common stock outstanding, has waived its right to receive the dividend on its shares. The MHC will waive 50 cents per share during the four quarters ending Jun 30, 2017, compared with the previously waived 40 cents during the four quarters ending Jun 30, 2016.

TFS Financial announced its first quarterly dividend in Feb 2008. However, the company suspended dividend payments from 2010 to 2014 owing to some regulatory issues. Later, the company resumed dividend payment in Sep 2014. Moreover, dividend declared by the company in Aug 2015 (10 cents per share) marked the biggest amount announced by TFS Financial since it went public in 2007.

TFS Financial’s capital deployment activities remain impressive. Under its on-going seventh repurchase program announced in Jul 2015, the company repurchased $94.6 million of outstanding common stock during the quarter ended Jun 30, 2016.

TFS Financial boasts a strong capital position. As of Jun 30, 2016, its Tier 1 leverage ratio was 13.48%, Common Equity Tier 1 and Tier 1 ratios were 24.35% and its total capital ratio was 25.29%, all surpassing the minimum requirements under the fully phased-in Basel III Rules. Moreover, cash & cash equivalents totaled $201.3 million, reflecting an increase of 30% from Sep 30, 2015 level.

We believe the company’s strategy to operate as a well-capitalized and profitable financial institution, are expected to boost growth as well as shareholders’ confidence. TFS Financial’s strong capital levels and adequate access to alternative funding sources will likely help in pursuing and nurturing customer and market confidence.

With strong capital position and steady liquidity levels, TFS Financial’s is expected to continue enhancing shareholders’ value, going forward.

Some related stocks worth considering include First Defiance (NASDAQ:FDEF) , Meta Financial Group, Inc. CASH, HomeStreet, Inc (NASDAQ:HMST) , all sporting a Zacks Rank #1 (Strong Buy).

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