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Be Sure To Check Out Northwest Bancshares, Inc. (NASDAQ:NWBI) Before It Goes Ex-Dividend

Simply Wall St
·3 mins read

It looks like Northwest Bancshares, Inc. (NASDAQ:NWBI) is about to go ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 5th of February will not receive the dividend, which will be paid on the 14th of February.

Northwest Bancshares's next dividend payment will be US$0.19 per share, and in the last 12 months, the company paid a total of US$0.76 per share. Looking at the last 12 months of distributions, Northwest Bancshares has a trailing yield of approximately 4.8% on its current stock price of $15.725. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Northwest Bancshares

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Northwest Bancshares is paying out an acceptable 68% of its profit, a common payout level among most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

NasdaqGS:NWBI Historical Dividend Yield, February 1st 2020
NasdaqGS:NWBI Historical Dividend Yield, February 1st 2020

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Northwest Bancshares earnings per share are up 9.2% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last ten years, Northwest Bancshares has lifted its dividend by approximately 6.9% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Should investors buy Northwest Bancshares for the upcoming dividend? Northwest Bancshares has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We're unconvinced on the company's merits, and think there might be better opportunities out there.

Ever wonder what the future holds for Northwest Bancshares? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.