Peoples Bancorp of North Carolina (NASDAQ:PEBK) Is Paying Out A Larger Dividend Than Last Year
The board of Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) has announced that it will be paying its dividend of $0.19 on the 15th of June, an increased payment from last year's comparable dividend. This takes the dividend yield to 5.2%, which shareholders will be pleased with.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Peoples Bancorp of North Carolina's stock price has reduced by 47% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
See our latest analysis for Peoples Bancorp of North Carolina
Peoples Bancorp of North Carolina's Earnings Will Easily Cover The Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Having distributed dividends for at least 10 years, Peoples Bancorp of North Carolina has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Peoples Bancorp of North Carolina's payout ratio of 25% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share could rise by 8.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was $0.0727, compared to the most recent full-year payment of $0.91. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.
The Dividend Has Growth Potential
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Peoples Bancorp of North Carolina has seen EPS rising for the last five years, at 8.2% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Peoples Bancorp of North Carolina's Dividend
Overall, a dividend increase is always good, and we think that Peoples Bancorp of North Carolina is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Peoples Bancorp of North Carolina that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
