On the 19 November 2018, Peoples Bancorp Inc (NASDAQ:PEBO) will be paying shareholders an upcoming dividend amount of US$0.30 per share. However, investors must have bought the company’s stock before 02 November 2018 in order to qualify for the payment. That means you have only 4 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Peoples Bancorp can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Peoples Bancorp fit our criteria?
The current trailing twelve-month payout ratio for the stock is 51%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect PEBO’s payout to fall to 42% of its earnings, which leads to a dividend yield of around 3.5%. However, EPS should increase to $2.72, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although PEBO’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Peoples Bancorp produces a yield of 3.5%, which is high for Banks stocks but still below the market’s top dividend payers.
Taking into account the dividend metrics, Peoples Bancorp ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three key aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PEBO’s future growth? Take a look at our free research report of analyst consensus for PEBO’s outlook.
- Valuation: What is PEBO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PEBO is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.