Why Peoples Bancorp (PEBO) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Peoples Bancorp in Focus
Based in Marietta, Peoples Bancorp (PEBO) is in the Finance sector, and so far this year, shares have seen a price change of -12.32%. The financial services and products company is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 5.45% compared to the Banks - Midwest industry's yield of 2.82% and the S&P 500's yield of 1.69%.
In terms of dividend growth, the company's current annualized dividend of $1.52 is up 6.3% from last year. Peoples Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 10.15%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Peoples Bancorp's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PEBO for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.19 per share, representing a year-over-year earnings growth rate of 47.69%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PEBO is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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