Peoples Financial Services (NASDAQ:PFIS) Has Announced That It Will Be Increasing Its Dividend To $0.40
The board of Peoples Financial Services Corp. (NASDAQ:PFIS) has announced that it will be paying its dividend of $0.40 on the 15th of September, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 3.0%.
View our latest analysis for Peoples Financial Services
Peoples Financial Services' Dividend Forecasted To Be Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Having paid out dividends for 8 years, Peoples Financial Services has a good history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 25% also shows that Peoples Financial Services is able to comfortably pay dividends.
Looking forward, earnings per share is forecast to fall by 2.8% over the next year. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 27%, which would be comfortable for the company to continue in the future.
Peoples Financial Services Doesn't Have A Long Payment History
Peoples Financial Services' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2014, the annual payment back then was $1.24, compared to the most recent full-year payment of $1.56. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Peoples Financial Services has impressed us by growing EPS at 18% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Peoples Financial Services' prospects of growing its dividend payments in the future.
We Really Like Peoples Financial Services' Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Peoples Financial Services (1 can't be ignored!) that you should be aware of before investing. 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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