Provident Financial Services (NYSE:PFS) Is Due To Pay A Dividend Of $0.24

The board of Provident Financial Services, Inc. (NYSE:PFS) has announced that it will pay a dividend on the 28th of November, with investors receiving $0.24 per share. Based on this payment, the dividend yield on the company's stock will be 5.2%, which is an attractive boost to shareholder returns.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Provident Financial Services' Earnings Will Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Provident Financial Services has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 12% also shows that Provident Financial Services is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 37.8% over the next 3 years. Analysts estimate the future payout ratio will be 38% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Provident Financial Services

Provident Financial Services Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.64 in 2015, and the most recent fiscal year payment was $0.96. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Provident Financial Services Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Provident Financial Services has impressed us by growing EPS at 9.6% per year over the past five years. Provident Financial Services definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Provident Financial Services Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income 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. For example, we've picked out 1 warning sign for Provident Financial Services that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.