Peoples Bancorp of North Carolina's (NASDAQ:PEBK) Dividend Will Be Increased To $0.19

Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of March to $0.19. Although the dividend is now higher, the yield is only 2.2%, which is below the industry average.

View our latest analysis for Peoples Bancorp of North Carolina

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

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Peoples Bancorp of North Carolina has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Peoples Bancorp of North Carolina's payout ratio sits at 24%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 10.8% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 31% 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. Since 2013, the annual payment back then was $0.0727, compared to the most recent full-year payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Peoples Bancorp of North Carolina has impressed us by growing EPS at 11% per 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 think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. If you are a dividend investor, you might also want to look at our curated list of high yield 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.