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 13th of September, with investors receiving $0.19 per share. This means the dividend yield will be fairly typical at 3.2%.

See our latest analysis for Peoples Bancorp of North Carolina

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

We aren't too impressed by dividend yields unless they can be sustained over time.

Peoples Bancorp of North Carolina has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Peoples Bancorp of North Carolina's payout ratio sits at 25%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS could expand by 5.2% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 32% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.109 in 2014, and the most recent fiscal year payment was $0.92. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. 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.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Peoples Bancorp of North Carolina has seen EPS rising for the last five years, at 5.2% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

Overall, a consistent dividend is a good thing, and we think that Peoples Bancorp of North Carolina has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for Peoples Bancorp of North Carolina that investors need to be conscious of moving forward. Is Peoples Bancorp of North Carolina not quite the opportunity you were looking for? Why not check out our selection of top 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.