Bankwell Financial Group (NASDAQ:BWFG) Has Affirmed Its Dividend Of $0.20

The board of Bankwell Financial Group, Inc. (NASDAQ:BWFG) has announced that it will pay a dividend on the 23rd of February, with investors receiving $0.20 per share. This means the dividend yield will be fairly typical at 2.7%.

View our latest analysis for Bankwell Financial Group

Bankwell Financial Group's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having paid out dividends for 8 years, Bankwell Financial Group has a good history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 17% also shows that Bankwell Financial Group is able to comfortably pay dividends.

EPS is set to fall by 29.7% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 21% over the same time period, which we think the company can easily maintain.

Bankwell Financial Group Doesn't Have A Long Payment History

It is great to see that Bankwell Financial Group has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the dividend has gone from $0.20 total annually to $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. Bankwell Financial Group has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bankwell Financial Group has impressed us by growing EPS at 16% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Bankwell Financial Group's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Bankwell Financial Group you should be aware of, and 1 of them is significant. If you are a dividend investor, you might also want to look at our curated list of high yield 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.