On the 27 August 2018, Bankwell Financial Group Inc (NASDAQ:BWFG) will be paying shareholders an upcoming dividend amount of US$0.12 per share. However, investors must have bought the company’s stock before 16 August 2018 in order to qualify for the payment. That means you have only 2 days left! 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 Bankwell Financial Group’s most recent financial data to examine its dividend characteristics in more detail.
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How does Bankwell Financial Group fare?
The current trailing twelve-month payout ratio for the stock is 18.80%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BWFG’s payout to increase to 22.48% of its earnings, which leads to a dividend yield of 1.65%. Furthermore, EPS should increase to $2.39. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view Bankwell Financial Group as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Bankwell Financial Group has a yield of 1.52%, which is on the low-side for Banks stocks.
If you are building an income portfolio, then Bankwell Financial Group is a complicated choice since it has some positive aspects as well as negative ones. 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 fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for BWFG’s future growth? Take a look at our free research report of analyst consensus for BWFG’s outlook.
Valuation: What is BWFG 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 BWFG 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.