PacWest Bancorp (NASDAQ:PACW) Is Paying Out A Dividend Of $0.25

PacWest Bancorp (NASDAQ:PACW) has announced that it will pay a dividend of $0.25 per share on the 31st of August. Based on this payment, the dividend yield will be 3.6%, which is fairly typical for the industry.

See our latest analysis for PacWest Bancorp

PacWest Bancorp's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

PacWest Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 23% also shows that PacWest Bancorp is able to comfortably pay dividends.

Looking forward, earnings per share is forecast to rise by 4.8% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 20% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2012, the dividend has gone from $0.04 total annually to $1.00. This works out to be a compound annual growth rate (CAGR) of approximately 38% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

We Could See PacWest Bancorp's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. PacWest Bancorp has seen EPS rising for the last five years, at 8.3% per annum. PacWest Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

PacWest Bancorp Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for PacWest Bancorp that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.