Finward Bancorp (NASDAQ:FNWD) Is Due To Pay A Dividend Of $0.31

Finward Bancorp (NASDAQ:FNWD) will pay a dividend of $0.31 on the 6th of July. The dividend yield will be 5.7% based on this payment which is still above the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Finward Bancorp's stock price has reduced by 40% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

Check out our latest analysis for Finward Bancorp

Finward Bancorp's Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Finward Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Finward Bancorp's payout ratio of 35% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to fall by 11.4%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 42%, 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.

Finward Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.76 in 2013 to the most recent total annual payment of $1.24. This implies that the company grew its distributions at a yearly rate of about 5.0% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Finward Bancorp May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, Finward Bancorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Finward Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Finward Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Finward Bancorp might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Finward Bancorp has 2 warning signs (and 1 which is concerning) we think you should know about. Is Finward Bancorp not quite the opportunity you were looking for? Why not check out our selection of top 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.