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Peoples Financial Services Corp. (NASDAQ:PFIS) Looks Interesting, And It's About To Pay A Dividend

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Simply Wall St
·3 min read
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Peoples Financial Services Corp. (NASDAQ:PFIS) stock is about to trade ex-dividend in 3 days. Ex-dividend means that investors that purchase the stock on or after the 25th of February will not receive this dividend, which will be paid on the 15th of March.

Peoples Financial Services's next dividend payment will be US$0.37 per share, and in the last 12 months, the company paid a total of US$1.48 per share. Based on the last year's worth of payments, Peoples Financial Services stock has a trailing yield of around 3.7% on the current share price of $40.4. If you buy this business for its dividend, you should have an idea of whether Peoples Financial Services's dividend is reliable and sustainable. So we need to investigate whether Peoples Financial Services can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Peoples Financial Services

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Peoples Financial Services paid out a comfortable 36% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Peoples Financial Services paid out over the last 12 months.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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, Peoples Financial Services's earnings per share have been growing at 11% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Peoples Financial Services has delivered an average of 2.6% per year annual increase in its dividend, based on the past seven years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Peoples Financial Services is keeping back more of its profits to grow the business.

The Bottom Line

Has Peoples Financial Services got what it takes to maintain its dividend payments? Companies like Peoples Financial Services that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Peoples Financial Services appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Peoples Financial Services for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Peoples Financial Services and understanding them should be part of your investment process.

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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.