Northwest Natural Holding Company's (NYSE:NWN) periodic dividend will be increasing on the 14th of November to $0.4925, with investors receiving 0.5% more than last year's $0.49. This makes the dividend yield about the same as the industry average at 4.3%.

Northwest Natural Holding's Projected Earnings Seem Likely To Cover Future Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Northwest Natural Holding's dividend was making up a very large proportion of earnings, and the company was also not generating any cash flow to offset this. We think that this practice can make the dividend quite risky in the future.

Looking forward, earnings per share is forecast to rise by 25.1% over the next year. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 63% which brings it into quite a comfortable range.

Northwest Natural Holding Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $1.86 total annually to $1.96. Dividend payments have been growing, but very slowly over the period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Northwest Natural Holding May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Northwest Natural Holding has only grown its earnings per share at 4.1% per annum over the past five years. Slow growth and a high payout ratio could mean that Northwest Natural Holding has maxed out the amount that it has been able to pay to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

Northwest Natural Holding's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Northwest Natural Holding's payments are rock solid. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. This company is not in the top tier of income providing stocks.

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. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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.