Yahoo Finance Finward Bancorp (NASDAQ:FNWD) Will Pay A Dividend Of $0.31
The board of Finward Bancorp (NASDAQ:FNWD) has announced that it will pay a dividend of $0.31 per share on the 6th of January. Based on this payment, the dividend yield will be 3.7%, which is fairly typical for the industry.
See our latest analysis for Finward Bancorp
Finward Bancorp's Earnings Will Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Having distributed dividends for at least 10 years, Finward Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Finward Bancorp's payout ratio of 34% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 25.4%. The future payout ratio could be 30% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Finward Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.60, compared to the most recent full-year payment of $1.24. This works out to be a compound annual growth rate (CAGR) of approximately 7.5% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately, Finward Bancorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Finward Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.
An additional note is that the company has been raising capital by issuing stock equal to 24% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
Finward Bancorp Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Finward Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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