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 of $0.20 per share on the 21st of May. This means that the annual payment will be 3.4% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Bankwell Financial Group

Bankwell Financial Group's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Bankwell Financial Group has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Bankwell Financial Group's latest earnings report puts its payout ratio at 21%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to fall by 1.1% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 25%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

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. The dividend has gone from an annual total of $0.20 in 2015 to the most recent total annual payment of $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Bankwell Financial Group has been growing its earnings per share at 11% a year over the past five years. Bankwell Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Bankwell Financial Group's Dividend

Overall, we like to see the dividend staying consistent, and we think Bankwell Financial Group might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. To that end, Bankwell Financial Group has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. 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.