If you are interested in cashing in on Provident Financial Services Inc’s (NYSE:PFS) upcoming dividend of US$0.21 per share, you only have 4 days left to buy the shares before its ex-dividend date, 14 November 2018, in time for dividends payable on the 30 November 2018. Is this future income a persuasive enough catalyst for investors to think about Provident Financial Services as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Provident Financial Services pass our checks?
Provident Financial Services has a trailing twelve-month payout ratio of 51%, which means that the dividend is covered by earnings. Going forward, analysts expect PFS’s payout to remain around the same level at 48% of its earnings, which leads to a dividend yield of 3.4%. Furthermore, EPS should increase to $1.81.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of PFS it has increased its DPS from $0.44 to $0.84 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes PFS a true dividend rockstar.
Compared to its peers, Provident Financial Services has a yield of 3.3%, which is on the low-side for Mortgage stocks.
Considering the dividend attributes we analyzed above, Provident Financial Services is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three essential factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PFS’s future growth? Take a look at our free research report of analyst consensus for PFS’s outlook.
- Valuation: What is PFS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PFS is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.