Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Honesdale, Norwood Financial Corp. (NWFL) is in the Finance sector, and so far this year, shares have seen a price change of 0.5%. The company is currently shelling out a dividend of $0.32 per share, with a dividend yield of 4.54%. This compares to the Banks - Northeast industry's yield of 2.42% and the S&P 500's yield of 1.35%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 3.2% from last year. Over the last 5 years, Norwood Financial Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.67%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Norwood Financial's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NWFL expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $3.40 per share, representing a year-over-year earnings growth rate of 9.32%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, NWFL presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Norwood Financial Corp. (NWFL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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