Northwest Bancshares Rewards Shareholders with Eight Consecutive Years of Dividend Boosts (NWBI)
By: Ned Piplovic,
Northwest Bancshares, Inc. (NYSE:NWBI) has rewarded its shareholders with an annual dividend hike every year since it started distributing dividends in 2010 and currently offers a 4% dividend yield.
The share price experienced moderate volatility over the past two years, which included a few uncharacteristic price spikes. Because of those spikes and volatility, the share price closed marginally below its level from 12 months earlier. However, the longer trends are mostly upward and have rewarded the company’s investors with double-digit-percentage share price growth over the past few years, as well as combined total return in excess of 50% over the past three years.
Dividend-seeking investors confident that Northwest Bancshares’ share price and dividend payouts might continue to rise should complete their own research quickly and, if inclined to do so, take a long position in NWBI prior to the company’s next May 2, 2018, ex-dividend date to ensure eligibility for the next round of dividend distributions on the May 17, 2018, pay date.
Northwest Bancshares, Inc. (NYSE:NWBI)
Headquartered in Warren, Pennsylvania, and founded in 1896, Northwest Bancshares, Inc. operates as a bank holding company for the Northwest Savings Bank. The company offers personal and business deposits, such as checking, savings, money market deposit, term certificate and individual retirement accounts. Additionally, the bank offers a variety of private and commercial loans, such as residential real estate and mortgage, short-term consumer, commercial real estate, commercial business and home equity loans. The company also offers lines of credit and consumer loans, including automobile, sales finance, unsecured personal and credit card loans, as well as loans secured by deposit accounts. Additionally, the company offers employee benefits, property and casualty insurance services, trust, investment management and brokerage services. As of March 31, 2018, the bank operated 164 banking locations in central and western Pennsylvania, western New York and eastern Ohio.
The company’s share price entered the trailing 12 months on a downtrend from a price spike in late 2016. Therefore, the share price continued to wane over the following four months and slid down to its 52-week low of $15.10 by September 7, 2017. After the September low, the share price spiked again and rose 17% before it reached the 52-week high of $17.66 on October 20, 2017.
However, the share price dropped immediately and gave back more than 80% of its short-term gains by November 9, 2017. After that recent spike, the price returned to rising at a more moderate pace and closed on April 23, 2018, at $16.83, which was still 4.7% below the October peak price and only 2.4% lower than it was one year earlier. However, that closing price was 11.5% above the 52-week low from September 2017 and 37% higher than it was five years ago.
The company’s current $0.17 dividend distribution amount is 6.3% higher than the $0.16 payout from the same period last year and converts to a $0.68 annualized dividend amount for 2018. This annualized dividend distribution amount is equivalent to a 4% forward dividend yield, which is 22.4% higher than the 3.3% simple average yield of the entire Financial sector. Compared to the 1.31% average yield of all the companies in the Savings & Loans market segment, the company’s 4% yield is more than three times higher. Even limiting the yield calculation only to companies that distribute dividends raises the average segment yield to just 2.12%. Northwest Bancshares’ current yield is still more than 90% above the 2.12% average yield of only dividend-paying companies in the segment.
The bank holding company managed to hike its annual dividend payout every year since it started distributing dividends to its shareholders in 2010. Over the past eight years, the company has enhanced its total annual dividend payout 70% from the $0.40 total annual amount in 2010 to the current $0.68 distribution amount. Since starting its current streak of annual dividend distribution hikes in 2010, the company has increased its annual payout at an average growth rate of nearly 7% per year.
While the company’s share price lost 2.4% over the past twelve months, the company’s dividend income distribution was able to overcome that small decline and still offer the company’s shareholders a 3% total return for the last year. However, over the longer terms of the last three and five years, the company rewarded its investors with total returns of 51% and 69.6% respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.