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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. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
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 9.35% since the start of the year. The independent commercial bank is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.19%. This compares to the Banks - West industry's yield of 2.03% and the S&P 500's yield of 1.34%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.72 is up 19.4% from last year. In the past five-year period, Preferred Bank has increased its dividend 4 times on a year-over-year basis for an average annual increase of 16.29%. 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. Right now, Preferred Bank's payout ratio is 25%, which means it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFBC for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.63 per share, which represents a year-over-year growth rate of 3.43%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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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. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
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 9.35% since the start of the year. The independent commercial bank is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.19%. This compares to the Banks - West industry's yield of 2.03% and the S&P 500's yield of 1.34%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.72 is up 19.4% from last year. In the past five-year period, Preferred Bank has increased its dividend 4 times on a year-over-year basis for an average annual increase of 16.29%. 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. Right now, Preferred Bank's payout ratio is 25%, which means it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFBC for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.63 per share, which represents a year-over-year growth rate of 3.43%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).