Peoples Financial Services' (NASDAQ:PFIS) Dividend Will Be $0.41

The board of Peoples Financial Services Corp. (NASDAQ:PFIS) has announced that it will pay a dividend of $0.41 per share on the 15th of September. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Peoples Financial Services

Peoples Financial Services' Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having paid out dividends for 9 years, Peoples Financial Services has a good history of paying out a part of its earnings to shareholders. Based on Peoples Financial Services' last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 27.5%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 45%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Peoples Financial Services Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2014, the dividend has gone from $1.24 total annually to $1.64. This means that it has been growing its distributions at 3.2% per annum over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Peoples Financial Services has impressed us by growing EPS at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Peoples Financial Services' prospects of growing its dividend payments in the future.

We Really Like Peoples Financial Services' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Peoples Financial Services (1 is a bit unpleasant!) that you should be aware of before investing. 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.