Penns Woods Bancorp, Inc. (NASDAQ:PWOD) Goes Ex-Dividend Soon

Penns Woods Bancorp, Inc. (NASDAQ:PWOD) stock is about to trade ex-dividend in three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Penns Woods Bancorp investors that purchase the stock on or after the 11th of June will not receive the dividend, which will be paid on the 25th of June.

The company's next dividend payment will be US$0.32 per share. Last year, in total, the company distributed US$1.28 to shareholders. Looking at the last 12 months of distributions, Penns Woods Bancorp has a trailing yield of approximately 6.3% on its current stock price of US$20.37. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Penns Woods Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Penns Woods Bancorp

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Penns Woods Bancorp is paying out an acceptable 59% of its profit, a common payout level among most companies.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Penns Woods Bancorp paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that Penns Woods Bancorp's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

We'd also point out that Penns Woods Bancorp issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Penns Woods Bancorp's dividend payments are broadly unchanged compared to where they were 10 years ago.

Final Takeaway

Is Penns Woods Bancorp an attractive dividend stock, or better left on the shelf? Penns Woods Bancorp's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. We're unconvinced on the company's merits, and think there might be better opportunities out there.

However if you're still interested in Penns Woods Bancorp as a potential investment, you should definitely consider some of the risks involved with Penns Woods Bancorp. Every company has risks, and we've spotted 1 warning sign for Penns Woods Bancorp you should know about.

If you're in the market for strong dividend payers, we recommend checking 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.