Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The PNC Financial Services Group, Inc. (NYSE:PNC) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 16th of January in order to be eligible for this dividend, which will be paid on the 5th of February.
PNC Financial Services Group's next dividend payment will be US$1.15 per share, and in the last 12 months, the company paid a total of US$4.60 per share. Based on the last year's worth of payments, PNC Financial Services Group has a trailing yield of 2.9% on the current stock price of $158.57. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately PNC Financial Services Group's payout ratio is modest, at just 36% of profit.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see PNC Financial Services Group earnings per share are up 8.5% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past ten years, PNC Financial Services Group has increased its dividend at approximately 28% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Is PNC Financial Services Group worth buying for its dividend? PNC Financial Services Group has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, PNC Financial Services Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Wondering what the future holds for PNC Financial Services Group? See what the 13 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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