Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Headquartered in Marietta, Peoples Bancorp (PEBO) is a Finance stock that has seen a price change of 32.53% so far this year. The financial services and products company is currently shelling out a dividend of $0.42 per share, with a dividend yield of 4.22%. This compares to the Banks - Southeast industry's yield of 1.93% and the S&P 500's yield of 1.33%.
Looking at dividend growth, the company's current annualized dividend of $1.68 is up 3.1% from last year. Over the last 5 years, Peoples Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.63%. 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 50%, meaning it paid out 50% of its trailing 12-month EPS as dividend.
PEBO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $3.56 per share, representing a year-over-year earnings growth rate of 14.10%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 have to be mindful 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 PEBO is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Peoples Bancorp Inc. (PEBO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).