Stock Analysis

You Have To Love Pathfinder Bancorp, Inc.'s (NASDAQ:PBHC) Dividend

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NasdaqCM:PBHC
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Is Pathfinder Bancorp, Inc. (NASDAQ:PBHC) a good dividend stock? How can we tell? Dividend paying companies with growing earnings can be highly rewarding in the long term. If you are hoping to live on your dividends, it's important to be more stringent with your investments than the average punter. Regular readers know we like to apply the same approach to each dividend stock, and we hope you'll find our analysis useful.

While Pathfinder Bancorp's 1.8% dividend yield is not the highest, we think its lengthy payment history is quite interesting. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.

Explore this interactive chart for our latest analysis on Pathfinder Bancorp!

historic-dividend
NasdaqCM:PBHC Historic Dividend February 15th 2021

Payout ratios

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. So we need to form a view on if a company's dividend is sustainable, relative to its net profit after tax. In the last year, Pathfinder Bancorp paid out 20% of its profit as dividends. Given the low payout ratio, it is hard to envision the dividend coming under threat, barring a catastrophe.

We update our data on Pathfinder Bancorp every 24 hours, so you can always get our latest analysis of its financial health, here.

Dividend Volatility

Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. For the purpose of this article, we only scrutinise the last decade of Pathfinder Bancorp's dividend payments. The dividend has been stable over the past 10 years, which is great. We think this could suggest some resilience to the business and its dividends. During the past 10-year period, the first annual payment was US$0.07 in 2011, compared to US$0.2 last year. Dividends per share have grown at approximately 13% per year over this time.

It's rare to find a company that has grown its dividends rapidly over 10 years and not had any notable cuts, but Pathfinder Bancorp has done it, which we really like.

Dividend Growth Potential

Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. It's good to see Pathfinder Bancorp has been growing its earnings per share at 12% a year over the past five years. Rapid earnings growth and a low payout ratio suggests this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Conclusion

To summarise, shareholders should always check that Pathfinder Bancorp's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. We're glad to see Pathfinder Bancorp has a low payout ratio, as this suggests earnings are being reinvested in the business. That said, we were glad to see it growing earnings and paying a fairly consistent dividend. Pathfinder Bancorp fits all of our criteria, and we think there are a lot of positives to it from a dividend perspective.

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. Taking the debate a bit further, we've identified 1 warning sign for Pathfinder Bancorp that investors need to be conscious of moving forward.

We have also put together a list of global stocks with a market capitalisation above $1bn and yielding more 3%.

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What are the risks and opportunities for Pathfinder Bancorp?

Pathfinder Bancorp, Inc. operates as a holding company for Pathfinder Bank that provides various banking and financial products and services primarily in Oswego and Onondaga Counties, New York.

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Rewards

  • Trading at 9.5% below our estimate of its fair value

  • Earnings grew by 39.2% over the past year

Risks

No risks detected for PBHC from our risks checks.

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About NasdaqCM:PBHC

Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a holding company for Pathfinder Bank that provides various banking and financial products and services primarily in Oswego and Onondaga Counties, New York.

Flawless balance sheet with solid track record and pays a dividend.