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Why Provident Financial (PFS) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Provident Financial in Focus
Provident Financial (PFS - Free Report) is headquartered in Jersey City, and is in the Finance sector. The stock has seen a price change of -6.07% since the start of the year. The holding company for The Provident Bank is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 4.22% compared to the Financial - Savings and Loan industry's yield of 2.65% and the S&P 500's yield of 1.55%.
In terms of dividend growth, the company's current annualized dividend of $0.96 is up 3.2% from last year. Provident Financial has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 4.44%. 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. Provident Financial's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFS for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.20 per share, which represents a year-over-year growth rate of 0.46%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that PFS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why Provident Financial (PFS) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Provident Financial in Focus
Provident Financial (PFS - Free Report) is headquartered in Jersey City, and is in the Finance sector. The stock has seen a price change of -6.07% since the start of the year. The holding company for The Provident Bank is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 4.22% compared to the Financial - Savings and Loan industry's yield of 2.65% and the S&P 500's yield of 1.55%.
In terms of dividend growth, the company's current annualized dividend of $0.96 is up 3.2% from last year. Provident Financial has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 4.44%. 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. Provident Financial's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFS for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.20 per share, which represents a year-over-year growth rate of 0.46%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that PFS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).