Should You Buy The PNC Financial Services Group Inc (NYSE:PNC) For Its Dividend?

Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. The PNC Financial Services Group Inc (NYSE:PNC) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Let's dig deeper into whether PNC Financial Services Group should have a place in your portfolio. Check out our latest analysis for PNC Financial Services Group

5 checks you should use to assess a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?
• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
• Has the amount of dividend per share grown over the past?
• Is its earnings sufficient to payout dividend at the current rate?
• Will the company be able to keep paying dividend based on the future earnings growth?

How well does PNC Financial Services Group fit our criteria?

PNC Financial Services Group has a trailing twelve-month payout ratio of 25.49%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect PNC's payout to increase to 35.11% of its earnings, which leads to a dividend yield of around 2.63%. However, EPS is forecasted to fall to $10.81 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, PNC Financial Services Group produces a yield of 2.06%, which is on the low-side for Banks stocks.

Next Steps:

With this in mind, I definitely rank PNC Financial Services Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three fundamental aspects you should look at:

1. Future Outlook: What are well-informed industry analysts predicting for PNC’s future growth? Take a look at our free research report of analyst consensus for PNC’s outlook.
2. Valuation: What is PNC worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PNC is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.