If you are interested in cashing in on Western New England Bancorp Inc’s (NASDAQ:WNEB) upcoming dividend of US$0.04 per share, you only have 4 days left to buy the shares before its ex-dividend date, 06 November 2018, in time for dividends payable on the 21 November 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Western New England Bancorp’s most recent financial data to examine its dividend characteristics in more detail.
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Western New England Bancorp pass our checks?
The current trailing twelve-month payout ratio for the stock is 36%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 34%, leading to a dividend yield of 1.8%. In addition to this, EPS should increase to $0.57.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Western New England Bancorp fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Compared to its peers, Western New England Bancorp produces a yield of 1.6%, which is on the low-side for Mortgage stocks.
Taking all the above into account, Western New England Bancorp is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for WNEB’s future growth? Take a look at our free research report of analyst consensus for WNEB’s outlook.
- Valuation: What is WNEB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WNEB is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.