Why NatWest Group (NWG) is a Top Dividend Stock for Your Portfolio

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

NatWest Group (NWG) is headquartered in London, and is in the Finance sector. The stock has seen a price change of -20.63% since the start of the year. The bank is paying out a dividend of $0.61 per share at the moment, with a dividend yield of 8.73% compared to the Banks - Foreign industry's yield of 2.73% and the S&P 500's yield of 1.48%.

Looking at dividend growth, the company's current annualized dividend of $1.21 is up 90.6% from last year. Over the last 5 years, NatWest Group has increased its dividend 5 times on a year-over-year basis for an average annual increase of 47.67%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. NatWest's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, NWG expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $1.95 per share, which represents a year-over-year growth rate of 8.94%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, NWG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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