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The PNC Financial Services Group, Inc (PNC) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
The PNC Financial Services Group, Inc in Focus
The PNC Financial Services Group, Inc (PNC - Free Report) is headquartered in Pittsburgh, and is in the Finance sector. The stock has seen a price change of -1.56% since the start of the year. The company is paying out a dividend of $1.5 per share at the moment, with a dividend yield of 3.86% compared to the Banks - Major Regional industry's yield of 3.1% and the S&P 500's yield of 1.61%.
Taking a look at the company's dividend growth, its current annualized dividend of $6 is up 4.3% from last year. The PNC Financial Services Group, Inc has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 13.08%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, The PNC Financial Services Group, Inc's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PNC expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $14.75 per share, which represents a year-over-year growth rate of 5.66%.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PNC 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).