Why Peoples Bancorp (PEBO) 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.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Peoples Bancorp in Focus

Based in Marietta, Peoples Bancorp (PEBO) is in the Finance sector, and so far this year, shares have seen a price change of -11.73%. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 5.13%. In comparison, the Banks - Midwest industry's yield is 2.72%, while the S&P 500's yield is 1.5%.

Looking at dividend growth, the company's current annualized dividend of $1.44 is up 0.7% 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 11.81%. 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. Peoples Bancorp's current payout ratio is 47%, meaning it paid out 47% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for PEBO for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.07 per share, which represents a year-over-year growth rate of 42.13%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, PEBO 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).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Peoples Bancorp Inc. (PEBO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.