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This is Why Peoples Bancorp (PEBO) 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.

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.

Peoples Bancorp in Focus

Headquartered in Marietta, Peoples Bancorp (PEBO - Free Report) is a Finance stock that has seen a price change of -5.44% so far this year. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 4.79%. In comparison, the Banks - Midwest industry's yield is 2.65%, while the S&P 500's yield is 1.47%.

Looking at dividend growth, the company's current annualized dividend of $1.44 is up 0.7% from last year. In the past five-year period, Peoples Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.81%. 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. Peoples Bancorp's current payout ratio is 46%. This 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 $3.15 per share, representing a year-over-year earnings growth rate of 45.83%.

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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PEBO presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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