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Bankwell Financial Group, Inc. (NASDAQ:BWFG) has announced that it will pay a dividend of $0.20 per share on the 24th of August. Based on this payment, the dividend yield will be 2.9%, which is fairly typical for the industry.
View our latest analysis for Bankwell Financial Group
Bankwell Financial Group's Earnings Will Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Bankwell Financial Group has a good history of paying out dividends, with its current track record at 8 years. Using data from its latest earnings report, Bankwell Financial Group's payout ratio sits at 17%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 19.8% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 26%, which we are pretty comfortable with and we think would be feasible on an earnings basis.
Bankwell Financial Group Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 8 years was $0.20 in 2015, and the most recent fiscal year payment was $0.80. This means that it has been growing its distributions at 19% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
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. Bankwell Financial Group has seen EPS rising for the last five years, at 18% per annum. Bankwell Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Bankwell Financial Group Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Bankwell Financial Group (1 is a bit unpleasant!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.