Peoples Bancorp (NASDAQ:PEBO) Is Increasing Its Dividend To $0.39

Peoples Bancorp Inc.'s (NASDAQ:PEBO) dividend will be increasing from last year's payment of the same period to $0.39 on 20th of November. This will take the annual payment to 5.7% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Peoples Bancorp

Peoples Bancorp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Peoples Bancorp 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's payout ratio sits at 11%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 17.0%. The future payout ratio could be 41% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Peoples Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.48, compared to the most recent full-year payment of $1.56. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Peoples Bancorp has impressed us by growing EPS at 6.6% per year over the past five years. Peoples Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We should note that Peoples Bancorp has issued stock equal to 25% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

We Really Like Peoples Bancorp'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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Peoples Bancorp that investors need to be conscious of moving forward. Is Peoples Bancorp 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.