NWF Group (LON:NWF) Has Announced That It Will Be Increasing Its Dividend To £0.065

Simply Wall St
·2 min read

NWF Group plc (LON:NWF) has announced that it will be increasing its dividend from last year's comparable payment on the 9th of December to £0.065. Despite this raise, the dividend yield of 3.4% is only a modest boost to shareholder returns.

Check out our latest analysis for NWF Group

NWF Group's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. The last dividend was quite easily covered by NWF Group's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 13.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 40% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

NWF Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the annual payment back then was £0.045, compared to the most recent full-year payment of £0.075. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. NWF Group has seen EPS rising for the last five years, at 8.6% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

NWF Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that NWF Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for NWF Group that investors should know about before committing capital to this stock. 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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