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Over the past 10 years Park National Corporation (NYSEMKT:PRK) has returned an average of 5.0% per year from dividend payouts. The stock currently pays out a dividend yield of 3.5%, and has a market cap of US$1.72b. Should it have a place in your portfolio? Let’s take a look at Park National in more detail.
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Will it be able to continue to payout at the current rate in the future?
How does Park National fare?
Park National has a trailing twelve-month payout ratio of 55.4%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 50.3%, leading to a dividend yield of around 3.6%. Furthermore, EPS should increase to $7.35.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. In the case of PRK it has increased its DPS from $3.76 to $3.84 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes PRK a true dividend rockstar.
In terms of its peers, Park National generates a yield of 3.5%, which is high for Banks stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank Park National 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, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for PRK’s future growth? Take a look at our free research report of analyst consensus for PRK’s outlook.
Valuation: What is PRK 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 PRK 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.