PNC Financial Services Group (NYSE:PNC) Is Increasing Its Dividend To $1.55

The board of The PNC Financial Services Group, Inc. (NYSE:PNC) has announced that it will be increasing its dividend by 3.3% on the 5th of August to $1.55, up from last year's comparable payment of $1.50. This will take the annual payment to 4.8% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for PNC Financial Services Group

PNC Financial Services Group's Earnings Will Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

PNC Financial Services Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on PNC Financial Services Group's last earnings report, the payout ratio is at a decent 41%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 2.4%. Analysts estimate the future payout ratio will be 44% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

PNC Financial Services Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.60 in 2013 to the most recent total annual payment of $6.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

PNC Financial Services Group Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. PNC Financial Services Group has seen EPS rising for the last five years, at 6.3% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like PNC Financial Services Group's Dividend

Overall, a dividend increase is always good, and we think that PNC Financial Services Group is a strong income stock thanks to its track record and growing earnings. 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 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for PNC Financial Services Group that you should be aware of before investing. Is PNC Financial Services Group 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.