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This is Why Preferred Bank (PFBC) is a Great Dividend Stock
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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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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
Headquartered in Los Angeles, Preferred Bank (PFBC - Free Report) is a Finance stock that has seen a price change of -1.23% so far this year. The independent commercial bank is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.43%. This compares to the Banks - West industry's yield of 2.81% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $1.72 is up 19.4% from last year. Over the last 5 years, Preferred Bank has increased its dividend 4 times on a year-over-year basis for an average annual increase of 15.92%. 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, Preferred Bank's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PFBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.83 per share, with earnings expected to increase 22.15% from the year ago period.
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.
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. With that in mind, PFBC 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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This is Why Preferred Bank (PFBC) is a Great Dividend Stock
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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
Headquartered in Los Angeles, Preferred Bank (PFBC - Free Report) is a Finance stock that has seen a price change of -1.23% so far this year. The independent commercial bank is currently shelling out a dividend of $0.43 per share, with a dividend yield of 2.43%. This compares to the Banks - West industry's yield of 2.81% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $1.72 is up 19.4% from last year. Over the last 5 years, Preferred Bank has increased its dividend 4 times on a year-over-year basis for an average annual increase of 15.92%. 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, Preferred Bank's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PFBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.83 per share, with earnings expected to increase 22.15% from the year ago period.
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.
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. With that in mind, PFBC 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).