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Peoples Bancorp Inc. (NASDAQ:PEBO) has pleased shareholders over the past 10 years, by paying out dividends. The stock currently pays out a dividend yield of 3.7%, and has a market cap of US$622m. Let’s dig deeper into whether Peoples Bancorp should have a place in your portfolio.
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Peoples Bancorp pass our checks?
The current trailing twelve-month payout ratio for the stock is 48%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect PEBO’s payout to fall to 41% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 3.9%. However, EPS should increase to $2.69, 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. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Peoples Bancorp produces a yield of 3.7%, which is high for Banks stocks.
With this in mind, I definitely rank Peoples Bancorp as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three fundamental 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 email@example.com.