Provident Financial Services' (NYSE:PFS) Dividend Will Be $0.24

The board of Provident Financial Services, Inc. (NYSE:PFS) has announced that it will pay a dividend on the 25th of November, with investors receiving $0.24 per share. Including this payment, the dividend yield on the stock will be 4.3%, which is a modest boost for shareholders' returns.

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having distributed dividends for at least 10 years, Provident Financial Services has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 44%, which means that Provident Financial Services would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 35.3%. Analysts forecast the future payout ratio could be 35% over the same time horizon, which is a number we think the company can maintain.

Provident Financial Services Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the dividend has gone from $0.48 total annually to $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Provident Financial Services' Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Provident Financial Services has seen EPS rising for the last five years, at 7.6% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Provident Financial Services' Dividend

Overall, we like to see the dividend staying consistent, and we think Provident Financial Services might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. 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 1 warning sign for Provident Financial Services that investors should know about before committing capital to this stock. 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.