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Are You Looking for a High-Growth Dividend Stock? Peoples Bancorp (PEBO) Could Be a Great Choice

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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.

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.

Peoples Bancorp in Focus

Based in Marietta, Peoples Bancorp (PEBO - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 0.75%. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 4.49%. In comparison, the Banks - Midwest industry's yield is 2.41%, while the S&P 500's yield is 1.37%.

Looking at dividend growth, the company's current annualized dividend of $1.44 is up 0.7% from last year. Peoples Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.45%. 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. Right now, Peoples Bancorp's payout ratio is 46%, which means it paid out 46% of its trailing 12-month EPS as dividend.

PEBO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.09 per share, which represents a year-over-year growth rate of 43.06%.

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. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PEBO 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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