The board of Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) has announced that it will pay a dividend of $0.33 per share on the 10th of February. This makes the dividend yield 5.1%, which will augment investor returns quite nicely.

Check out our latest analysis for Pacific Premier Bancorp

Pacific Premier Bancorp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Pacific Premier Bancorp has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 80%shows that Pacific Premier Bancorp would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to fall by 10.0% over the next 3 years. Despite that, future payout ratio in that same time horizon is forecasted by analysts to be 85%, meaning that most of earnings is being paid out to shareholders.

Pacific Premier Bancorp Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.88 in 2019, and the most recent fiscal year payment was $1.32. This means that it has been growing its distributions at 7.0% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Dividend Growth Is Doubtful

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Over the past five years, it looks as though Pacific Premier Bancorp's EPS has declined at around 9.2% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Pacific Premier Bancorp's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Pacific Premier Bancorp (1 is a bit concerning!) that you should be aware of before investing. Is Pacific Premier Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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