Northwest Natural Holding (NYSE:NWN) Will Pay A Larger Dividend Than Last Year At $0.4875
Northwest Natural Holding Company's (NYSE:NWN) periodic dividend will be increasing on the 15th of November to $0.4875, with investors receiving 0.5% more than last year's $0.485. This makes the dividend yield 4.9%, which is above the industry average.
Check out our latest analysis for Northwest Natural Holding
Northwest Natural Holding's Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Northwest Natural Holding's earnings easily covered the dividend, but free cash flows were negative. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 6.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 65%, which is in the range that makes us comfortable with the sustainability of the dividend.
Northwest Natural Holding Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.82 total annually to $1.94. Its dividends have grown at less than 1% per annum over this time frame. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Northwest Natural Holding May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 3.4% per year. Growth of 3.4% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
Our Thoughts On Northwest Natural Holding's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Northwest Natural Holding is earning enough to cover the payments, the cash flows are lacking. Overall, we don't think this company has the makings of a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Northwest Natural Holding (of which 1 shouldn't be ignored!) you should know about. Is Northwest Natural Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
