At Simply Wall St, we are big fans of dividends, so we are excited to see that Norwood Financial Corp. (NASDAQ:NWFL) is set to trade ex-dividend in the next three days. The ex-dividend date is important because it determines which shareholders are eligible to receive a dividend. To receive Norwood Financial’s upcoming dividend of US$0.30 per share, you must purchase shares before July 15th as the company will pay out on August 1st.
In the last 12 months, Norwood Financial distributed a total of US$1.20 per share, resulting in a trailing yield of 4.8% based on the current share price of US$24.87. Dividends are a key source of income for many shareholders, but it is important to ensure that the company’s financial health can support these payments and allow for growth.
Norwood Financial paid out 62% of its earnings to investors last year, which is a normal payout level for most businesses. Generally, lower payout ratios indicate a more sustainable dividend. Despite a slight decline in earnings over the past five years, Norwood Financial has managed to increase its dividend by an average of 4.5% per year over the past decade.
However, it is worth noting that the company is paying out more than half of its profits to shareholders, which may not be sustainable in the long run. Investors should carefully consider the risks associated with owning Norwood Financial stock, especially as earnings per share have been declining.
In conclusion, while dividends are an attractive feature for many investors, it is essential to assess the overall financial health of a company before making investment decisions. We recommend conducting a thorough analysis to determine whether Norwood Financial is potentially over or undervalued, considering factors such as fair value estimates, risks, dividends, insider transactions, and financial health.