Penns Woods Bancorp (NASDAQ:PWOD) Will Pay A Dividend Of $0.32

Penns Woods Bancorp, Inc. (NASDAQ:PWOD) has announced that it will pay a dividend of $0.32 per share on the 25th of June. This makes the dividend yield 6.5%, which will augment investor returns quite nicely.

Check out our latest analysis for Penns Woods Bancorp

Penns Woods Bancorp's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

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 59%, which means that Penns Woods Bancorp would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 0.9% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 62%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Penns Woods Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.25 in 2014 to the most recent total annual 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.

Penns Woods Bancorp May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Penns Woods Bancorp hasn't seen much change in its earnings per share over the last five years.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Penns Woods Bancorp that investors should know about before committing capital to this stock. Is Penns Woods Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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