Peoples Bancorp of North Carolina (NASDAQ:PEBK) Will Pay A Dividend Of $0.15

The board of Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) has announced that it will pay a dividend on the 15th of February, with investors receiving $0.15 per share. This payment means the dividend yield will be 2.2%, which is below the average for the industry.

Check out our latest analysis for Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Peoples Bancorp of North Carolina has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. 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 10.8% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of $0.0727 in 2013 to the most recent total annual payment of $0.72. This works out to be a compound annual growth rate (CAGR) of approximately 26% a year over that time. 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 Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Peoples Bancorp of North Carolina has been growing its earnings per share at 11% a year over the past five years. Peoples Bancorp of North Carolina definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Peoples Bancorp of North Carolina's Dividend

Overall, we like to see the dividend staying consistent, and we think Peoples Bancorp of North Carolina might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Peoples Bancorp of North Carolina that investors need to be conscious of moving forward. 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.