Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
PCB Bancorp in Focus
PCB Bancorp (PCB) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of -0.35% since the start of the year. The company is paying out a dividend of $0.2 per share at the moment, with a dividend yield of 3.97% compared to the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $0.80 is up 11.1% from last year. PCB Bancorp has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 17.45%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. PCB Bancorp's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PCB for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.33 per share, with earnings expected to increase 33.91% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PCB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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PCB Bancorp (PCB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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