WaFd, Inc.'s Dividend Resurgence: A Post-Merger Dividend Machine with Sustainable Growth Potential

Unlocking Value in a Post-Merger Banking Giant
WaFd, Inc. (NASDAQ: WAFD) has emerged as a compelling income investment, leveraging the success of its 2024 Luther Burbank acquisition to fuel dividend growth and operational resilience. The company’s recent 27-cent-per-share dividend increase—marking its 169th consecutive quarterly payout—serves as a bold testament to its financial stability. With $27.6 billion in assets and a regional banking footprint spanning nine U.S. states, WAFD is positioned to capitalize on its post-merger synergies while rewarding shareholders with a growing dividend yield of 3.2%.

The Merger’s Multiplier Effect: Assets, Efficiency, and Dividends

The $2.5 billion acquisition of Luther Burbank in late 2024 was a strategic masterstroke. The merger boosted WaFd’s total assets to $27.6 billion, up 12% year-over-year, while slashing costs through branch consolidations and overlapping operations. This efficiency-driven growth is now translating into shareholder returns.

The dividend increase to 27 cents per share—up from 25 cents in early 2024—reflects management’s confidence in the integration’s success. This rise isn’t arbitrary: it’s backed by a 19% quarterly jump in net income to $56.3 million, driven by a widened net interest margin (NIM) to 2.55%, a 16-basis-point improvement from the prior quarter.

Why WAFD’s Dividend Machine is Sustainable

1. Consistency in a Volatile Market:
   With 169 consecutive dividends since 1917, WaFd has outlasted banking cycles. The recent hike underscores its conservative capital management, even as peers trim payouts. The $3.0 billion in shareholders’ equity provides a robust cushion against economic shocks.

2. Operational Strength Anchors the Business:

3. Credit quality remains pristine: Non-performing assets fell to 0.26% of total assets, near historic lows.

4. A shift toward high-margin business banking—evident in 382 new small business loans originated in Q2—is diversifying revenue streams.

5. Valuation Discounts Present Buying Opportunities:
   Trading at a price-to-book ratio of 1.2x, WAFD is undervalued relative to regional peers averaging 1.5x. Meanwhile, its dividend yield of 3.2% exceeds the S&P 500’s 1.3%, offering income seekers a rare blend of safety and growth.

Risks and the Case for Immediate Action

Critics may cite macroeconomic risks, such as rising interest rates or loan demand slowdowns. However, WaFd’s $21.4 billion in deposits (up 8% annually) and its focus on stable mid-sized markets mitigate these concerns.

The bigger risk is waiting too long. With WAFD’s stock up 22% year-to-date on improving fundamentals, the window to buy at current valuations is narrowing. The dividend’s upward trajectory—paired with a shareholder buyback program—creates a virtuous cycle of wealth creation for investors.

Final Call: A Dividend Growth Gem

WaFd, Inc. is more than a post-merger survivor—it’s a dividend growth powerhouse. The 27-cent hike isn’t just a payout; it’s a signal of management’s confidence in its ability to sustain returns through cycles. With a fortress balance sheet, expanding margins, and a dividend yield that outperforms the market, WAFD offers a rare combination of income, growth, and safety.

Investors should act now: Add WAFD to your portfolio before its valuation catches up to its fundamentals. This is a rare opportunity to own a bank that’s not just surviving post-merger but thriving—and rewarding shareholders handsomely along the way.

Disclosure: This analysis is for informational purposes only and not a recommendation to buy or sell securities. Always conduct your own research.