Here's Why We're Wary Of Buying PacWest Bancorp's (NASDAQ:PACW) For Its Upcoming Dividend
NASDAQ:PACW) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 28th of August, you won’t be eligible to receive this dividend, when it is paid on the 10th of September.” data-reactid=”28″>PacWest Bancorp (NASDAQ:PACW) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 28th of August, you won’t be eligible to receive this dividend, when it is paid on the 10th of September.
PacWest Bancorp’s next dividend payment will be US$0.25 per share, on the back of last year when the company paid a total of US$1.00 to shareholders. Based on the last year’s worth of payments, PacWest Bancorp has a trailing yield of 5.4% on the current stock price of $18.42. If you buy this business for its dividend, you should have an idea of whether PacWest Bancorp’s dividend is reliable and sustainable. So we need to investigate whether PacWest Bancorp can afford its dividend, and if the dividend could grow.
View our latest analysis for PacWest Bancorp ” data-reactid=”30″> View our latest analysis for PacWest Bancorp
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. PacWest Bancorp lost money last year, so the fact that it’s paying a dividend is certainly disconcerting. There might be a good reason for this, but we’d want to look into it further before getting comfortable.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”36″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. PacWest Bancorp reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, PacWest Bancorp has lifted its dividend by approximately 38% a year on average.
our latest analysis on PacWest Bancorp’s balance sheet health here.” data-reactid=”52″>Get our latest analysis on PacWest Bancorp’s balance sheet health here.
To Sum It Up
Is PacWest Bancorp worth buying for its dividend? It’s definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. These characteristics don’t generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
we’ve identified 2 warning signs with PacWest Bancorp and understanding them should be part of your investment process.” data-reactid=”55″>So if you’re still interested in PacWest Bancorp despite it’s poor dividend qualities, you should be well informed on some of the risks facing this stock. In terms of investment risks, we’ve identified 2 warning signs with PacWest Bancorp and understanding them should be part of your investment process.
a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”56″>We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”57″>This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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