Norwood Financial's (NASDAQ:NWFL) Dividend Will Be $0.29

The board of Norwood Financial Corp. (NASDAQ:NWFL) has announced that it will pay a dividend on the 1st of August, with investors receiving $0.29 per share. Based on this payment, the dividend yield will be 3.8%, which is fairly typical for the industry.

View our latest analysis for Norwood Financial

Norwood Financial's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Having distributed dividends for at least 10 years, Norwood Financial has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 33%, which means that Norwood Financial would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 19.1% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

Norwood Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.727 in 2013 to the most recent total annual payment of $1.16. This means that it has been growing its distributions at 4.8% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

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. Norwood Financial has impressed us by growing EPS at 19% per year over the past five years. Norwood Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Norwood Financial Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Norwood Financial stock. 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.