NWF Group's (LON:NWF) Dividend Will Be £0.01

NWF Group plc (LON:NWF) will pay a dividend of £0.01 on the 2nd of May. This means the annual payment will be 3.2% of the current stock price, which is lower than the industry average.

View our latest analysis for NWF Group

NWF Group's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, NWF Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to fall by 48.4% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 41%, which is comfortable for the company to continue in the future.

NWF Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was £0.045 in 2013, and the most recent fiscal year payment was £0.075. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. NWF Group has impressed us by growing EPS at 24% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like NWF Group's Dividend

Overall, we like to see the dividend staying consistent, and we think NWF Group might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, NWF Group has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is NWF Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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