Park National Corporation (NYSEMKT:PRK) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 15th of August in order to be eligible for this dividend, which will be paid on the 10th of September.
Park National’s upcoming dividend is US$1.01 a share, following on from the last 12 months, when the company distributed a total of US$4.04 per share to shareholders. Last year’s total dividend payments show that Park National has a trailing yield of 4.4% on the current share price of $91.49. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it’s growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Park National is paying out an acceptable 64% of its profit, a common payout level among most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we’re encouraged by the steady growth at Park National, with earnings per share up 4.5% on average over the last five years.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Park National has increased its dividend at approximately 0.6% a year on average.
Should investors buy Park National for the upcoming dividend? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. We’re unconvinced on the company’s merits, and think there might be better opportunities out there.
Wondering what the future holds for Park National? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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