Markets
PNC

Why PNC Financial Services (PNC) is a Great Dividend Stock Right Now

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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 tha t dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

PNC Financial Services in Focus

Headquartered in Pittsburgh, PNC Financial Services (PNC) is a Finance stock that has seen a price change of 4.98% so far this year. The regional bank operator is paying out a dividend of $0.95 per share at the moment, with a dividend yield of 3.1% compared to the Banks - Major Regional industry's yield of 2.9% and the S&P 500's yield of 1.97%.

Taking a look at the company's dividend growth, its current annualized dividend of $3.80 is up 11.8% from last year. PNC Financial Services has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 15.64%. 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. PNC Financial Services's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for PNC for this fiscal year. The Zacks Consensus Estimate for 2019 is $11.33 per share, representing a year-over-year earnings growth rate of 5.79%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PNC 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).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The PNC Financial Services Group, Inc (PNC): Get Free Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

PNC

Other Topics

Investing Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More