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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
The PNC Financial Services Group, Inc (PNC) is headquartered in Pittsburgh, and is in the Finance sector. The stock has seen a price change of 1.91% since the start of the year. Currently paying a dividend of $1.6 per share, the company has a dividend yield of 3.26%. In comparison, the Financial - Investment Bank industry's yield is 0.88%, while the S&P 500's yield is 1.51%.
Looking at dividend growth, the company's current annualized dividend of $6.40 is up 1.6% from last year. In the past five-year period, The PNC Financial Services Group, Inc has increased its dividend 4 times on a year-over-year basis for an average annual increase of 9.10%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. The PNC Financial Services Group's current payout ratio is 48%, meaning it paid out 48% of its trailing 12-month EPS as dividend.
PNC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $14.96 per share, with earnings expected to increase 7.55% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).
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