Peoples Bancorp (NASDAQ:PEBO) Is Paying Out A Larger Dividend Than Last Year
Peoples Bancorp Inc. (NASDAQ:PEBO) will increase its dividend from last year's comparable payment on the 21st of August to $0.39. This takes the dividend yield to 5.6%, which shareholders will be pleased with.
View our latest analysis for Peoples Bancorp
Peoples Bancorp's Dividend Forecasted To Be Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Peoples Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Peoples Bancorp's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, earnings per share is forecast to rise by 2.5% over the next year. If the dividend continues on this path, the future payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.
Peoples Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.48 total annually to $1.56. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Has Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Peoples Bancorp has impressed us by growing EPS at 6.1% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
An additional note is that the company has been raising capital by issuing stock equal to 25% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
We Really Like Peoples Bancorp's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Peoples Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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