Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) will pay a dividend of $0.33 on the 12th of November. The dividend yield will be 5.3% based on this payment which is still above the industry average.

View our latest analysis for Pacific Premier Bancorp

Pacific Premier Bancorp's Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having paid out dividends for 6 years, Pacific Premier Bancorp has a good history of paying out a part of its earnings to shareholders. Despite this history however, Pacific Premier Bancorp's latest earnings report actually shows that the company didn't have enough earnings to cover its dividends, paying out more than it earned. This is an alarming sign for the sustainability of its dividends, as it may mean that Pacific Premier Bancorpis pulling cash from elsewhere to keep its shareholders happy.

Over the next 3 years, EPS is forecast to expand rapidly. The payout ratio could also get to 87% over the same time period, according to analysts, which is certainly still sustainable.

Pacific Premier Bancorp Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was $0.88, compared to the most recent full-year payment of $1.32. This works out to be a compound annual growth rate (CAGR) of approximately 7.0% a year 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 Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though Pacific Premier Bancorp's EPS has declined at around 10% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

We're Not Big Fans Of Pacific Premier Bancorp's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Pacific Premier Bancorp make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint.