Peoples Financial Services (NASDAQ:PFIS) Has Affirmed Its Dividend Of $0.41

Peoples Financial Services Corp. (NASDAQ:PFIS) will pay a dividend of $0.41 on the 14th of June. Based on this payment, the dividend yield on the company's stock will be 4.2%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Peoples Financial Services

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

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having distributed dividends for at least 10 years, Peoples Financial Services has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Peoples Financial Services' payout ratio of 50% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 37.2%. If the dividend continues along recent trends, we estimate the future payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

Peoples Financial Services Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.24 in 2014 to the most recent total annual payment of $1.64. This means that it has been growing its distributions at 2.8% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. However, Peoples Financial Services' EPS was effectively flat over the past five years, which could stop the company from paying more every year.

Our Thoughts On Peoples Financial Services' Dividend

Overall, a consistent dividend is a good thing, and we think that Peoples Financial Services has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Peoples Financial Services in our latest insider ownership analysis. Is Peoples Financial Services not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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

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.