Peoples Bancorp of North Carolina (NASDAQ:PEBK) Could Be A Buy For Its Upcoming Dividend

Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) is about to trade ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 2nd of December will not receive this dividend, which will be paid on the 15th of December.

Peoples Bancorp of North Carolina's next dividend payment will be US$0.15 per share, and in the last 12 months, the company paid a total of US$0.75 per share. Looking at the last 12 months of distributions, Peoples Bancorp of North Carolina has a trailing yield of approximately 2.9% on its current stock price of $25.78. If you buy this business for its dividend, you should have an idea of whether Peoples Bancorp of North Carolina's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Peoples Bancorp of North Carolina

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Peoples Bancorp of North Carolina's payout ratio is modest, at just 28% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Peoples Bancorp of North Carolina paid out over the last 12 months.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Peoples Bancorp of North Carolina, with earnings per share up 6.9% 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, Peoples Bancorp of North Carolina has increased its dividend at approximately 26% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Peoples Bancorp of North Carolina an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Peoples Bancorp of North Carolina appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Peoples Bancorp of North Carolina for the dividends alone, you should always be mindful of the risks involved. For example, we've found 1 warning sign for Peoples Bancorp of North Carolina that we recommend you consider before investing in the business.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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