This is Why Bankwell Financial Group, Inc. (BWFG) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bankwell Financial Group, Inc. In Focus
Headquartered in New Canaan, Bankwell Financial Group, Inc. (BWFG) is a Finance stock that has seen a price change of 48.59% so far this year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2.48%. In comparison, the Banks - Northeast industry's yield is 2.15%, while the S&P 500's yield is 1.39%.
In terms of dividend growth, the company's current annualized dividend of $0.72 is up 28.6% from last year. Bankwell Financial Group, Inc. has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 21.92%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Bankwell Financial Group, Inc.'s current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BWFG for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.22 per share, representing a year-over-year earnings growth rate of 329.33%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BWFG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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