Lanny’s Recent Purchase – NWFL

So it is time for the Final Push in December to see if we can buy the best opportunity stock to hit our yearly goals we had set in the prior year.  The market has been extremely choppy as of late, but it was time for me to make an investment.  The investment was into my Roth-IRA account, and you’ll see why within the article.  Whom did I make a purchase into?  Let’s check this out.

 Norwood Financial Corporation (NWFL)

NWFL

From Google, Finance “Norwood Financial Corp. is a bank holding company. The Company operates through its subsidiary, Wayne Bank (the Bank). Wayne Bank is a chartered bank and trust company. The Bank is an independent community bank that operates around five offices in the Wayne County, three offices in Pike County, four offices in Monroe County and three offices in Lackawanna County. The Bank offers various personal and business credit services, trust and investment products, and real estate settlement services to the consumers, businesses, nonprofit organizations and municipalities in each of the communities that the Bank serves. The Bank primarily serves the Pennsylvania counties of Wayne, Pike, Monroe and Lackawanna, as well as the Susquehanna County. In addition, the Bank operates around 15 automated teller machines, each one located at a branch facility. The Bank operates a Wealth Management/Trust Department, which provides estate planning, investment management and financial planning to customers.”

This is a community bank, everyone.  One that is roughly $800M in total assets, which to put that into perspective – JPMorgan (JPM) has $2.4 Trillion.  So we are talking 800,000,000 vs 2,400,000,000,000 aka quite a few times bigger.  This purchase is similar to the one I made into Citizens & Northern (CZNC) back in January of this year.   Essentially, there is still extreme consolidation in the financial institution markets, especially in the midwest, as I am an auditor of financial institutions (my ear is always low to the ground) and I buy for a good stream of dividend income, where they have a past of increasing it every now and then.  Also – my goal is to be paid, while I wait for a potential acquisition to then use more capital and do the next one, within a retirement account, to reduce my tax liability, and to keep the forward dividend income edging up higher, as I have more capital then to purchase another stock.  Interesting, eh?  Here are Norwood Financial’s (NWFL) figures from a dividend diplomat stock screening perspective, below.  It’s worthy to note – Bert bought them back in March for almost the same price as I paid, so not much appreciation has occurred.  You’ll find out later on, after I made this purchase on the 2nd of December, Bert may have made a move on something as well shortly after.  That punk got a better price, dammit.  Haha.   All in all here are the figures:

1.) Surprisingly – this bank has 16 years plus of dividend growth!  WHOA.  Not bad, eh?  For a small community bank, this was great to see, though, you’ll see the next bullet point.

2.) Their 5 year dividend growth rate is 1.95%.  Not the best growth rate, BUT, that’s okay.  Banks typically don’t have the easiest time increasing their dividend and interest rates are still low – therefore, the margin is continually being squeezed.  The increase this year was 3.33% – which is much better than the 5 year average, so I’m optimistic.  Heck – it was better than some of our big companies increasing their dividends by small amount, EMR even comes to mind.  Psh.

3.) Dividend yield – with an annual dividend amount of $1.24 at a price point of $28.75 that I bought in at on December 2nd, equates to 4.31%.  Not too bad – better than my individual portfolio weighted average and my overall portfolio yield.  I liked this.

4.) A high earning bank at over 1% Return on Assets.  Something that is hard for most banks to do.  I liked this + the prime potential of being acquired down the road.

5.) 5 year dividend yield average is roughly the same.  No real price movement, so this is understandable.

So there is a two fold approach here: I am buying a community bank that pays a great yield that increases it potentially every single year.  Further, the second stage is that it may get acquired, as most small community banks have been swallowed up by bigger ones.  Therefore, there is typically a nice premium paid on the stock (two of my clients both had their stocks triple and quadruple) and then I will get proceeds and then reinvest into the next one, to capture even more yield that can increase and potentially have the same action again performed.  I am being paid an increasing income to wait on a great performing bank.  I don’t mind and I believe NWFL fits the bill here.

NWFL Stock Purchase Summary

I purchased midday on December 2, 2015 50.00 shares at $28.75 per share + commissions of $6.95.  Total cost = $1,444.45.  Dividend Income added at $1.24 per share per year, 50 X $1.24 = $62.00 added.  This, with the current price points, would reinvest and grab me 2 more shares at least per year and then I have a small dividend growth on top of that to boot, at the moment.  This is a fun and interesting one for me, as the purchase of NWFL falls more in line as well with what industry I currently work it – which makes it that much more “exciting” with a bit of an “ah ha” moment.  Lastly, this aims me closer to my $6,750 projected dividend income goal by the end of the year/month, almost there…

Very pleased with this purchase and looking forward to the first reinvested dividend.  Have you been buying in the first week of December?  Any different areas from an investors point that we aren’t looking into, in regards to industry/sector?  Think this was a good purchase?  Would you buy?  What else are you seeing?  Thank you for coming by and as always – appreciate your input and comments.  Talk soon!

-Lanny

Facebooktwitterredditpinterestlinkedinmail

9 thoughts on “Lanny’s Recent Purchase – NWFL

  1. Good buy! They’ve been close to the top of my list for a while … something else always seems to grab my attention though. Last month it was PULB – not much of a premium when BUSE announced their buyout last week. You ever going to publish your small bank watch list?

    • Tawcan,

      Thank you! Hard to come up on individuals radars, that’s for sure. Think it really stems from the auditing clientele that we have and our ears being to the floor on these types of companies. Any questions on banks – let me know, I can usually tell the health of a bank fairly easy.

      -Lanny

  2. I’m not sure I would buy a small US bank while I have so many good options in Canada, like NA for example. However, this is an interesting choice! Looks like good potential and future growth!

    Cheers,

    Mike

    • AFFJ,

      Thank you – need to keep the pedal low and hard, given KMI’s announcement… wonder how many of us were impacted by that result.

      Either which way, I’m pumped to own this bank in my Roth and seeing where this bank goes!! Thanks again AFFJ!

      -Lanny

Leave a Reply

Your email address will not be published. Required fields are marked *