Should You Buy Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) For Its Upcoming Dividend?

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) is about to go ex-dividend in just four days. You can purchase shares before the 2nd of March in order to receive the dividend, which the company will pay on the 15th of March.

Peoples Bancorp of North Carolina's upcoming dividend is US$0.16 a share, following on from the last 12 months, when the company distributed a total of US$0.75 per share to shareholders. Calculating the last year's worth of payments shows that Peoples Bancorp of North Carolina has a trailing yield of 3.2% on the current share price of $24.78. 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. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Peoples Bancorp of North Carolina

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Peoples Bancorp of North Carolina paying out a modest 31% of its earnings.

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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Peoples Bancorp of North Carolina earnings per share are up 4.4% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Peoples Bancorp of North Carolina has delivered an average of 27% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is Peoples Bancorp of North Carolina worth buying for its dividend? Peoples Bancorp of North Carolina has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Peoples Bancorp of North Carolina ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

Want to learn more about Peoples Bancorp of North Carolina? Here's a visualisation of its historical rate of revenue and earnings growth.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

When trading Peoples Bancorp of North Carolina or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.