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Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) has announced that it will pay a dividend of $0.16 per share on the 14th of February. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.
Check out our latest analysis for Peoples Bancorp of North Carolina
Peoples Bancorp of North Carolina's Earnings Will Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable.
Peoples Bancorp of North Carolina has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Peoples Bancorp of North Carolina's latest earnings report puts its payout ratio at 25%, showing that the company can pay out its dividends comfortably.
Over the next year, EPS could expand by 4.7% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of $0.146 in 2015 to the most recent total annual payment of $0.92. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.
Peoples Bancorp of North Carolina May Find It Hard To Grow The Dividend
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Earnings per share has been crawling upwards at 4.7% per year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
Our Thoughts On Peoples Bancorp of North Carolina's Dividend
Overall, we think Peoples Bancorp of North Carolina is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Peoples Bancorp of North Carolina that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.