Why Peoples Financial Services (PFIS) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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 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 1.02%. Currently paying a dividend of $0.39 per share, the company has a dividend yield of 2.93%. In comparison, the Banks - Northeast industry's yield is 2.46%, while the S&P 500's yield is 1.75%.
In terms of dividend growth, the company's current annualized dividend of $1.56 is up 4% from last year. Over the last 5 years, Peoples Financial Services has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.52%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Peoples Financial Services's current payout ratio is 33%, meaning 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 $5.27 per share, which represents a year-over-year growth rate of 12.13%.
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. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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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