Peoples Financial Services (PFIS) is a Top Dividend Stock Right Now: Should You Buy?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Peoples Financial Services in Focus
Based in Scranton, Peoples Financial Services (PFIS) is in the Finance sector, and so far this year, shares have seen a price change of -1.01%. Currently paying a dividend of $0.39 per share, the company has a dividend yield of 2.99%. In comparison, the Banks - Northeast industry's yield is 2.28%, while the S&P 500's yield is 1.53%.
In terms of dividend growth, the company's current annualized dividend of $1.56 is up 4% from last year. In the past five-year period, Peoples Financial Services has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.58%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Peoples Financial Services's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.
PFIS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.72 per share, representing a year-over-year earnings growth rate of 0.43%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PFIS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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