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Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) has announced that it will pay a dividend of $0.33 per share on the 10th of February. This means the annual payment is 5.3% of the current stock price, which is above the average for the industry.
Check out our latest analysis for Pacific Premier Bancorp
Pacific Premier Bancorp's Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Pacific Premier Bancorp has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Based on Pacific Premier Bancorp's last earnings report, the payout ratio is at a decent 80%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share is forecast to fall by 9.5% over the next 3 years. Fortunately, the future payout ratio could reach 85% in the same 3 years as estimated by analysts, which is on the higher side, but certainly still feasible.
Pacific Premier Bancorp Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.88 in 2019, and the most recent fiscal year payment was $1.32. This works out to be a compound annual growth rate (CAGR) of approximately 7.0% a year over that time. Pacific Premier Bancorp has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
Dividend Growth May Be Hard To Come By
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Pacific Premier Bancorp's earnings per share has shrunk at approximately 9.2% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
The Dividend Could Prove To Be Unreliable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Pacific Premier Bancorp's payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Pacific Premier Bancorp (of which 1 is significant!) you should know about. Is Pacific Premier Bancorp not quite the opportunity you were looking for? Why not check out our selection of top 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.