Northwest Bancshares, Inc. (NASDAQ:NWBI) Passed Our Checks, And It's About To Pay A US$0.20 Dividend
Northwest Bancshares, Inc. (NASDAQ:NWBI) is about to trade ex-dividend in the next two days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Northwest Bancshares' shares on or after the 5th of November will not receive the dividend, which will be paid on the 17th of November.
The company's upcoming dividend is US$0.20 a share, following on from the last 12 months, when the company distributed a total of US$0.80 per share to shareholders. Based on the last year's worth of payments, Northwest Bancshares stock has a trailing yield of around 5.2% on the current share price of US$15.24. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Northwest Bancshares can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Northwest Bancshares paid out more than half (58%) of its earnings last year, which is a regular payout ratio for most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Check out our latest analysis for Northwest Bancshares
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Northwest Bancshares's earnings per share have risen 17% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Northwest Bancshares has increased its dividend at approximately 3.6% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Should investors buy Northwest Bancshares for the upcoming dividend? Earnings per share are growing nicely, and Northwest Bancshares is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Northwest Bancshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for Northwest Bancshares? See what the eight analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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