Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 1st of August in order to receive the dividend, which the company will pay on the 15th of August.
Pacific Premier Bancorp's next dividend payment will be US$0.22 per share. Last year, in total, the company distributed US$0.88 to shareholders. Based on the last year's worth of payments, Pacific Premier Bancorp stock has a trailing yield of around 2.8% on the current share price of $31.73. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Pacific Premier Bancorp is paying out just 19% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Pacific Premier Bancorp's earnings have been skyrocketing, up 33% per annum for the past five years.
This is Pacific Premier Bancorp's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
To Sum It Up
Should investors buy Pacific Premier Bancorp for the upcoming dividend? Companies like Pacific Premier Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Pacific Premier Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
Ever wonder what the future holds for Pacific Premier Bancorp? See what the seven 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.
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