Penns Woods Bancorp (NASDAQ:PWOD) Has Announced A Dividend Of $0.32

Penns Woods Bancorp, Inc. (NASDAQ:PWOD) will pay a dividend of $0.32 on the 20th of December. Based on this payment, the dividend yield on the company's stock will be 5.0%, which is an attractive boost to shareholder returns.

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Penns Woods 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.

Penns Woods Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 51%, which means that Penns Woods Bancorp would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 8.2% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.

Penns Woods Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the annual payment back then was $1.25, compared to the most recent full-year payment of $1.28. Its dividends have grown at less than 1% per annum over this time frame. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See Penns Woods Bancorp's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Penns Woods Bancorp has been growing its earnings per share at 8.2% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Penns Woods Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Penns Woods Bancorp might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Penns Woods Bancorp management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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