Peoples Financial Services (NASDAQ:PFIS) Has Announced A Dividend Of $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. Based on this payment, the dividend yield will be 3.6%, which is fairly typical for the industry.

See our latest analysis for Peoples Financial Services

Peoples Financial Services' Payment Expected To Have Solid Earnings Coverage

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

Peoples Financial Services has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 32%shows that Peoples Financial Services would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to fall by 21.0% over the next year. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 41%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

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. The annual payment during the last 9 years was $1.24 in 2014, and the most recent fiscal year payment was $1.64. This means that it has been growing its distributions at 3.2% per annum over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Peoples Financial Services has grown earnings per share at 14% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

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 company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

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. To that end, Peoples Financial Services has 2 warning signs (and 1 which is a bit concerning) we think you should know about. 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.