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Why Provident Financial (PFS) is a Great Dividend Stock Right Now
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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. But 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
Headquartered in Jersey City, Provident Financial (PFS - Free Report) is a Finance stock that has seen a price change of -8.63% so far this year. The holding company for The Provident Bank is currently shelling out a dividend of $0.24 per share, with a dividend yield of 4.34%. This compares to the Financial - Savings and Loan industry's yield of 2.57% and the S&P 500's yield of 1.75%.
In terms of dividend growth, the company's current annualized dividend of $0.96 is up 3.2% from last year. Over the last 5 years, Provident Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 4.44%. 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. Provident Financial's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
PFS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.20 per share, with earnings expected to increase 0.46% from the year ago period.
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. But, not every company offers 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. 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 Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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
Headquartered in Jersey City, Provident Financial (PFS - Free Report) is a Finance stock that has seen a price change of -8.63% so far this year. The holding company for The Provident Bank is currently shelling out a dividend of $0.24 per share, with a dividend yield of 4.34%. This compares to the Financial - Savings and Loan industry's yield of 2.57% and the S&P 500's yield of 1.75%.
In terms of dividend growth, the company's current annualized dividend of $0.96 is up 3.2% from last year. Over the last 5 years, Provident Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 4.44%. 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. Provident Financial's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
PFS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.20 per share, with earnings expected to increase 0.46% from the year ago period.
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. But, not every company offers 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. 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).