Peoples Financial Services' (NASDAQ:PFIS) Shareholders Will Receive A Bigger Dividend Than Last Year
Peoples Financial Services Corp. (NASDAQ:PFIS) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of June to $0.41. This makes the dividend yield about the same as the industry average at 4.3%.
See our latest analysis for Peoples Financial Services
Peoples Financial Services' Earnings Will Easily Cover The Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Peoples Financial Services has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 32%shows that Peoples Financial Services would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to fall by 1.1% 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 34%, which would be comfortable for the company to continue in the future.
Peoples Financial Services Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 9 years was $1.24 in 2014, and the most recent fiscal year payment was $1.64. This implies that the company grew its distributions at a yearly rate of about 3.2% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Peoples Financial Services has grown earnings per share at 14% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Peoples Financial Services' Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
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. To that end, Peoples Financial Services has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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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