U.S. markets open in 4 hours 16 minutes
  • S&P Futures

    +38.25 (+0.88%)
  • Dow Futures

    +324.00 (+0.96%)
  • Nasdaq Futures

    +128.25 (+0.85%)
  • Russell 2000 Futures

    +28.20 (+1.30%)
  • Crude Oil

    +1.04 (+1.48%)
  • Gold

    +1.00 (+0.06%)
  • Silver

    +0.29 (+1.29%)

    +0.0012 (+0.11%)
  • 10-Yr Bond

    0.0000 (0.00%)
  • Vix

    +1.97 (+9.47%)

    +0.0032 (+0.23%)

    +0.1410 (+0.13%)

    -1,899.66 (-4.21%)
  • CMC Crypto 200

    -50.48 (-4.45%)
  • FTSE 100

    +62.89 (+0.91%)
  • Nikkei 225

    -660.34 (-2.17%)

Why It Might Not Make Sense To Buy Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) For Its Upcoming Dividend

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Readers hoping to buy Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 6th of May in order to be eligible for this dividend, which will be paid on the 14th of May.

Pacific Premier Bancorp's next dividend payment will be US$0.33 per share, and in the last 12 months, the company paid a total of US$1.32 per share. Last year's total dividend payments show that Pacific Premier Bancorp has a trailing yield of 3.0% on the current share price of $44.03. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Pacific Premier Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Pacific Premier Bancorp

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. Last year Pacific Premier Bancorp paid out 99% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.


Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Pacific Premier Bancorp's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Pacific Premier Bancorp has delivered 22% dividend growth per year on average over the past two years.

To Sum It Up

From a dividend perspective, should investors buy or avoid Pacific Premier Bancorp? Earnings per share have not grown at all and Pacific Premier Bancorp is paying out an uncomfortably high percentage of its profit as dividends. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Pacific Premier Bancorp. Our analysis shows 5 warning signs for Pacific Premier Bancorp that we strongly recommend you have a look at before investing in the company.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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.