Capitol Federal Enhances Shareholder Value - Analyst Blog

Capitol Federal Financial, Inc. CFFN continues to be an asset for yield seeking investors. The company's board of directors declared a special dividend of 25 cents per share. The dividend – TRUE BLUE® CAPITOL – will be paid on Jun 27 to shareholders of record as of Jun 12.

Earlier, Capitol Federal used to pay the named dividend at the year end. However, to maintain an even flow of return to shareholders throughout the year, the company decided to declare the same to be paid in June.

The total dividend disbursement for Capitol Federal stands at nearly $34.6 million and will be funded by its banking subsidiary, Capitol Federal Savings Bank. The subsidiary bank has consented to infuse the parent company with capital distribution of $36.0 million before Jun 30.

Capitol Federal's timely dividend payouts are backed by its earnings power and sound capital health. Apart from regular quarterly dividend of 7.5 cents per share, the company also pays out special named as well as a year-end dividend.

Notably, Capitol Federal remains focused on returning 100% of its earnings to shareholders in fiscal 2014. The excess earnings that will be left with the company after disbursing the regular payouts will be returned to shareholders in form of a year-end dividend, tentatively in December.

Additionally, Capitol Federal will continue its share buyback activities. The company has nearly $72.4 million worth shares yet to be repurchased under its present share buyback program.

The TRUE BLUE® CAPITOL dividend payout will increase Capitol Federal's compensation expense by $1.1 million as the compensation packages of certain employees of the firm include stock offerings as well. However, this increase will be mitigated by an anticipated decline of nearly 30–40 basis points in effective tax rate for fiscal 2014.

The efficient capital deployment activities on Capitol Federal's front increase investors' confidence and in turn will propel the stock price. Moreover, it reflects the steady capital position of the company, and thereby enhances its market credibility.

Capitol Federal currently carries a Zacks Rank #3 (Hold). Some better-ranked financial service providers include Anchor Bancorp ANCB, BankFinancial Corp. BFIN and Cape Bancorp, Inc. CBNJ. While Anchor Bancorp sports a Zacks Rank #1 (Strong Buy), BankFinancial and Cape Bancorp hold a Zacks Rank #2 (Buy).