Park National Corporation (NYSEMKT:PRK) has pleased shareholders over the past 10 years, by paying out dividends. The company currently pays out a dividend yield of 4.3% to shareholders, making it a relatively attractive dividend stock. Let’s dig deeper into whether Park National should have a place in your portfolio.
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Park National fare?
The current trailing twelve-month payout ratio for the stock is 54%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 48% which, assuming the share price stays the same, leads to a dividend yield of 3.9%. In addition to this, EPS is forecasted to fall to $7.04 in the upcoming year.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. PRK has increased its DPS from $3.76 to $4.24 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Park National produces a yield of 4.3%, which is high for Banks stocks.
With these dividend metrics in mind, I definitely rank Park National as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for PRK’s future growth? Take a look at our free research report of analyst consensus for PRK’s outlook.
- Valuation: What is PRK 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 PRK is currently mispriced by the market.
- 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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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.