An in-depth analysis of the dividend history, yield, and growth of Preferred Bank
Preferred Bank (PFBC, Financial) recently announced a dividend of $0.55 per share, payable on 2023-10-20, with the ex-dividend date set for 2023-10-05. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Preferred Banks dividend performance and assess its sustainability.
What Does Preferred Bank Do?
Preferred Bank is a commercial bank located in California. Its products and services are divided into Personal Banking, Business Banking, and Commercial Banking which includes Checking accounts, Savings accounts, CDs, Loans and Credit, Electronic banking and Treasury Management. It provides personalized deposit services, real estate finance, commercial loans, and trade finance credit facilities to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals and high-net-worth individuals. The bank generates a majority of its revenue from Southern and Northern California and Flushing.
A Glimpse at Preferred Bank's Dividend History
Preferred Bank has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Preferred Bank's Dividend Yield and Growth
As of today, Preferred Bank currently has a 12-month trailing dividend yield of 3.35% and a 12-month forward dividend yield of 3.55%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Preferred Bank's annual dividend growth rate was 15.30%. Extended to a five-year horizon, this rate increased to 16.90% per year. Based on Preferred Bank's dividend yield and five-year growth rate, the 5-year yield on cost of Preferred Bank stock as of today is approximately 7.31%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Preferred Bank's dividend payout ratio is 0.20.
Preferred Bank's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Preferred Bank's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Preferred Bank's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Preferred Bank's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Preferred Bank's revenue has increased by approximately 14.80% per year on average, a rate that outperforms than approximately 82.1% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Preferred Bank's earnings increased by approximately 19.00% per year on average, a rate that outperforms than approximately 73.69% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 19.60%, which outperforms than approximately 79.9% of global competitors.
Concluding Thoughts
In conclusion, Preferred Bank's consistent dividend payments, impressive dividend growth rate, low payout ratio, high profitability, and strong growth metrics suggest a robust and sustainable dividend profile. These factors, combined with the company's strong financial performance, indicate that Preferred Bank is well-positioned to continue rewarding its shareholders with dividends in the future.
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