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 24th of September. This means the annual payment is 5.6% of the current stock price, which is above the average for the industry.

See our latest analysis for Penns Woods Bancorp

Penns Woods Bancorp's Earnings Will Easily Cover The Distributions

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 55%, 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 0.5% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 57%, which is definitely feasible to continue.

Penns Woods Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.25 in 2014 to the most recent total annual payment of $1.28. Dividend payments have grown at less than 1% a year over this period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Penns Woods Bancorp May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Unfortunately, Penns Woods Bancorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Penns Woods Bancorp's Dividend

Overall, we think Penns Woods Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. 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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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.