Peoples Bancorp of North Carolina (NASDAQ:PEBK) Has Affirmed Its Dividend Of $0.19

The board of Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) has announced that it will pay a dividend on the 15th of March, with investors receiving $0.19 per share. This payment means that the dividend yield will be 3.5%, which is around the industry average.

See our latest analysis for Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina's Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Peoples Bancorp of North Carolina has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 26%, which means that Peoples Bancorp of North Carolina would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 4.7% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.109 in 2014 to the most recent total annual payment of $0.92. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. Peoples Bancorp of North Carolina has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend's Growth Prospects Are Limited

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Peoples Bancorp of North Carolina has only grown its earnings per share at 4.7% per annum over the past five years. While growth may be thin on the ground, Peoples Bancorp of North Carolina could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, we think Peoples Bancorp of North Carolina is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Peoples Bancorp of North Carolina that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.