Yahoo Finance What To Know Before Buying Pioneer Credit Limited (ASX:PNC) For Its Dividend
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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Pioneer Credit Limited (ASX:PNC) has been paying a dividend to shareholders. Today it yields 5.7%. Let's dig deeper into whether Pioneer Credit should have a place in your portfolio.
View our latest analysis for Pioneer Credit
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Pioneer Credit fit our criteria?
Pioneer Credit has a trailing twelve-month payout ratio of 49%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect PNC's payout to remain around the same level at 51% of its earnings. Assuming a constant share price, this equates to a dividend yield of 7.3%. Moreover, EPS should increase to A$0.29.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. The reality is that it is too early to consider Pioneer Credit as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Pioneer Credit generates a yield of 5.7%, which is high for Diversified Financial stocks but still below the market's top dividend payers.
Next Steps:
If you are building an income portfolio, then Pioneer Credit is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for PNC’s future growth? Take a look at our free research report of analyst consensus for PNC’s outlook.
Valuation: What is PNC worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PNC is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
