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Peapack-Gladstone Financial Corporation (NASDAQ:PGC) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

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Simply Wall St
·3 min read
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Peapack-Gladstone Financial Corporation (NASDAQ:PGC) stock is about to trade ex-dividend in 4 days time. You will need to purchase shares before the 11th of May to receive the dividend, which will be paid on the 27th of May.

Peapack-Gladstone Financial's next dividend payment will be US$0.05 per share, and in the last 12 months, the company paid a total of US$0.20 per share. Based on the last year's worth of payments, Peapack-Gladstone Financial stock has a trailing yield of around 1.2% on the current share price of $16.99. 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.

View our latest analysis for Peapack-Gladstone Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Peapack-Gladstone Financial is paying out just 8.1% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

NasdaqGS:PGC Historical Dividend Yield May 6th 2020
NasdaqGS:PGC Historical Dividend Yield May 6th 2020

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Peapack-Gladstone Financial's earnings per share have been growing at 15% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Peapack-Gladstone Financial has seen its dividend decline 11% per annum on average over the past ten years, which is not great to see. Peapack-Gladstone Financial is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Should investors buy Peapack-Gladstone Financial for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Peapack-Gladstone Financial appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Peapack-Gladstone Financial is facing. Be aware that Peapack-Gladstone Financial is showing 2 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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 editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.