The PNC Financial Services Group Inc. (NYSE:PNC) will increase its regular dividend to $1.60 on August 5th, meaning investors will receive 3.2% more in dividends than last year’s $1.55. This brings the annual payout to 4.0% of the stock’s value, more than what most companies in the industry are paying.
View our latest analysis for The PNC Financial Services Group
PNC Financial Services Group’s profits will easily cover its dividend.
While a high dividend yield is great, you also need to consider whether the payments are sustainable.
The PNC Financial Services Group has established itself as a dividend paying company with a track record of distributing profits to shareholders for over a decade. According to PNC Financial Services Group’s most recent earnings report, it has a decent dividend payout ratio of 52%, meaning it can comfortably pay its dividend.
EPS is expected to grow 36.3% over the next three years, and analysts predict that future dividend payout ratios over the same period could be 41%, a figure they believe the company can sustain.
Historical Dividend
PNC Financial Services Group has a proven track record
The company has been paying dividends for a long time and has been very stable, which gives us confidence in the potential for future dividends. Since 2014, dividends have grown from a total of $1.76 per year to $6.20 per year. This means that the company’s dividends have grown by approximately 13% per year over this period. Rapidly growing dividends over the long term are a very valuable feature for an income stock.
Dividend increases may be hard to achieve
Some investors may be eager to buy the company’s stock based on its dividend history. However, over the past five years, PNC Financial Services Group has grown its earnings per share at just 2.6% per year. As PNC Financial Services Group struggles to find viable investment opportunities, it is increasing returns to shareholders. While that’s not a bad thing in itself, we can’t expect dividends to grow unless earnings growth picks up.
PNC Financial Services Group’s dividend is really attractive
Overall, growing dividends are always a good thing, and we think PNC Financial Services Group is a strong income stock due to its track record and growing earnings. Dividends are easily covered by earnings, and earnings convert to cash flow. Taking all of this into account, this could be a good dividend opportunity.
It is important to note that companies with a consistent dividend policy will gain more investor confidence than those with an erratic policy. At the same time, there are other factors readers should be aware of before putting their money into a stock. Earnings growth generally bodes well for the future value of a company’s dividend payments. See if the 17 PNC Financial Services Group analysts we track are predicting continued growth with our free report on analyst forecasts for the company. Is PNC Financial Services Group not the opportunity you’ve been looking for? Why not check out our selection of the best dividend stocks.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
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