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Why Dividend Hunters Love Northwest Bancshares, Inc. (NASDAQ:NWBI)

Simply Wall St

Over the past 10 years Northwest Bancshares, Inc. (NASDAQ:NWBI) has been paying dividends to shareholders. The company currently pays out a dividend yield of 3.9% to shareholders, making it a relatively attractive dividend stock. Does Northwest Bancshares tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

View our latest analysis for Northwest Bancshares

Here’s how I find good dividend stocks

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

  • Is it the top 25% annual dividend yield payer?

  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?

  • Has the amount of dividend per share grown over the past?

  • Is its earnings sufficient to payout dividend at the current rate?

  • Will the company be able to keep paying dividend based on the future earnings growth?

NasdaqGS:NWBI Historical Dividend Yield, March 5th 2019
NasdaqGS:NWBI Historical Dividend Yield, March 5th 2019

How does Northwest Bancshares fare?

Northwest Bancshares has a trailing twelve-month payout ratio of 66%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect NWBI’s payout to remain around the same level at 68% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.0%. In addition to this, EPS should increase to $1.09.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although NWBI’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Compared to its peers, Northwest Bancshares has a yield of 3.9%, which is high for Mortgage stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Northwest Bancshares is definitely worth considering for investors looking to build a dedicated income 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. There are three relevant factors you should look at:

  1. 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.

  2. 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.

  3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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.

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. Thank you for reading.