Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Northwest Bancshares Inc (NASDAQ:NWBI) has paid dividends to shareholders, and these days it yields 3.7%. Should it have a place in your portfolio? Let’s take a look at Northwest Bancshares in more detail.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five 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 dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Northwest Bancshares fit our criteria?
Northwest Bancshares has a trailing twelve-month payout ratio of 70.1%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect NWBI’s payout to remain around the same level at 65.1% of its earnings, which leads to a dividend yield of around 3.8%. Moreover, EPS should increase to $1.05.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Northwest Bancshares generates a yield of 3.7%, which is high for Mortgage stocks but still below the market’s top dividend payers.
With these dividend metrics in mind, I definitely rank Northwest Bancshares as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three essential aspects you should look at:
- 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 firstname.lastname@example.org.