Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Los Angeles, PCB Bancorp (PCB) is a Finance stock that has seen a price change of 0.99% so far this year. The company is currently shelling out a dividend of $0.20 per share, with a dividend yield of 3.91%. This compares to the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.51%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 11.1% from last year. Over the last 5 years, PCB Bancorp has increased its dividend 3 times on a year-over-year basis for an average annual increase of 17.02%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. PCB Bancorp's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PCB expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.37 per share, representing a year-over-year earnings growth rate of 36.21%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PCB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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PCB Bancorp (PCB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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