The board of Penns Woods Bancorp, Inc. (NASDAQ:PWOD) has announced that it will pay a dividend on the 22nd of December, with investors receiving $0.32 per share. This makes the dividend yield 6.3%, which will augment investor returns quite nicely.

View our latest analysis for Penns Woods Bancorp

Penns Woods Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Having distributed dividends for at least 10 years, Penns Woods Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Penns Woods Bancorp's last earnings report, the payout ratio is at a decent 58%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share could rise by 6.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 56% by next year, which we think can be pretty sustainable going forward.

Penns Woods Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.25 total annually to $1.28. Its dividends have grown at less than 1% per annum over this time frame. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Penns Woods Bancorp has seen EPS rising for the last five years, at 6.4% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Penns Woods Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Penns Woods Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Penns Woods Bancorp stock. Is Penns Woods Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.