Pacific Premier Bancorp (NASDAQ:PPBI) Is Paying Out A Dividend Of $0.33

Pacific Premier Bancorp, Inc.'s (NASDAQ:PPBI) investors are due to receive a payment of $0.33 per share on 13th of May. This makes the dividend yield 6.0%, which will augment investor returns quite nicely.

See our latest analysis for Pacific Premier Bancorp

Pacific Premier Bancorp Will Pay Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having paid out dividends for 5 years, Pacific Premier Bancorp has a good history of paying out a part of its earnings to shareholders. Past distributions unfortunately do not guarantee future ones, and Pacific Premier Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is worrying for investors of Pacific Premier Bancorp, as it points towards the dividends being unsustainable in the long term.

The next 12 months is set to see EPS grow by 75.6%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Pacific Premier Bancorp Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $0.88 in 2019 to the most recent total annual payment of $1.32. This means that it has been growing its distributions at 8.4% per annum over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Pacific Premier Bancorp to be a consistent dividend paying stock.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the past five years, it looks as though Pacific Premier Bancorp's EPS has declined at around 43% a year. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

We're Not Big Fans Of Pacific Premier Bancorp's Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Pacific Premier Bancorp that investors should know about before committing capital to this stock. Is Pacific Premier 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.