It looks like The PNC Financial Services Group, Inc. (NYSE:PNC) is about to go ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company’s books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. Meaning, you will need to purchase PNC Financial Services Group’s shares before the 13th of January to receive the dividend, which will be paid on the 5th of February.
The company’s upcoming dividend is US$1.50 a share, following on from the last 12 months, when the company distributed a total of US$6.00 per share to shareholders. Based on the last year’s worth of payments, PNC Financial Services Group has a trailing yield of 3.7% on the current stock price of $164.21. If you buy this business for its dividend, you should have an idea of whether PNC Financial Services Group’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. PNC Financial Services Group paid out a comfortable 42% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we’re glad to see PNC Financial Services Group’s earnings per share have risen 13% per annum over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, PNC Financial Services Group has lifted its dividend by approximately 14% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Is PNC Financial Services Group an attractive dividend stock, or better left on the shelf? Companies like PNC Financial Services Group that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. In summary, PNC Financial Services Group appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
On that note, you’ll want to research what risks PNC Financial Services Group is facing. Case in point: We’ve spotted 1 warning sign for PNC Financial Services Group you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.
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