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Preferred Bank (PFBC) is a Top Dividend Stock Right Now: Should You Buy?
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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. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Preferred Bank in Focus
Based in Los Angeles, Preferred Bank (PFBC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 29.6%. The independent commercial bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.32% compared to the Banks - West industry's yield of 1.92% and the S&P 500's yield of 1.29%.
In terms of dividend growth, the company's current annualized dividend of $1.52 is up 26.7% from last year. Over the last 5 years, Preferred Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 18.55%. Looking ahead, future dividend growth will be dependent on earnings growth and 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.
Earnings growth looks solid for PFBC for this fiscal year. The Zacks Consensus Estimate for 2021 is $5.91 per share, representing a year-over-year earnings growth rate of 27.10%.
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. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Preferred Bank (PFBC) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Preferred Bank in Focus
Based in Los Angeles, Preferred Bank (PFBC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 29.6%. The independent commercial bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.32% compared to the Banks - West industry's yield of 1.92% and the S&P 500's yield of 1.29%.
In terms of dividend growth, the company's current annualized dividend of $1.52 is up 26.7% from last year. Over the last 5 years, Preferred Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 18.55%. Looking ahead, future dividend growth will be dependent on earnings growth and 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.
Earnings growth looks solid for PFBC for this fiscal year. The Zacks Consensus Estimate for 2021 is $5.91 per share, representing a year-over-year earnings growth rate of 27.10%.
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. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).