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This is Why Preferred Bank (PFBC) is a Great Dividend Stock
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Preferred Bank in Focus
Preferred Bank (PFBC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of 26.45% since the start of the year. The independent commercial bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.38% compared to the Banks - West industry's yield of 1.77% and the S&P 500's yield of 1.34%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 26.7% from last year. Preferred Bank has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 18.55%. 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. Preferred Bank's current payout ratio is 24%. This means it paid out 24% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PFBC expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $6.02 per share, which represents a year-over-year growth rate of 29.46%.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PFBC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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This is Why Preferred Bank (PFBC) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Preferred Bank in Focus
Preferred Bank (PFBC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of 26.45% since the start of the year. The independent commercial bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.38% compared to the Banks - West industry's yield of 1.77% and the S&P 500's yield of 1.34%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 26.7% from last year. Preferred Bank has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 18.55%. 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. Preferred Bank's current payout ratio is 24%. This means it paid out 24% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PFBC expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $6.02 per share, which represents a year-over-year growth rate of 29.46%.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PFBC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).