Shares of Northwest Bancshares, Inc. (NASDAQ:NWBI) will begin trading ex-dividend in 4 days. To qualify for the dividend check of US$0.18 per share, investors must have owned the shares prior to 31 January 2019, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income a persuasive enough catalyst for investors to think about Northwest Bancshares as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Northwest Bancshares pass our checks?
Northwest Bancshares has a trailing twelve-month payout ratio of 66%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 69% which, assuming the share price stays the same, leads to a dividend yield of 4.1%. In addition to this, EPS should increase to $1.07.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Northwest Bancshares produces a yield of 4.1%, which is high for Mortgage stocks.
With this in mind, I definitely rank Northwest Bancshares as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for NWBI’s future growth? Take a look at our free research report of analyst consensus for NWBI’s outlook.
Valuation: What is NWBI 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 NWBI is currently mispriced by the market.
Other 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.