Penns Woods Bancorp's (NASDAQ:PWOD) Dividend Will Be $0.32

The board of Penns Woods Bancorp, Inc. (NASDAQ:PWOD) has announced that it will pay a dividend of $0.32 per share on the 20th of June. The dividend yield will be 5.2% based on this payment which is still above the industry average.

Check out our latest analysis for Penns Woods Bancorp

Penns Woods Bancorp's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Penns Woods Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Penns Woods Bancorp's last earnings report, the payout ratio is at a decent 48%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share could rise by 12.5% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

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 2013 to the most recent total annual payment of $1.28. Dividend payments have grown at less than 1% a year over this period. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

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. We are encouraged to see that Penns Woods Bancorp has grown earnings per share at 13% per 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. Are management backing themselves to deliver performance? Check their shareholdings in Penns Woods Bancorp in our latest insider ownership analysis. 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.