All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 tha t dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Stock Yards Bancorp in Focus
Stock Yards Bancorp (SYBT) is headquartered in Louisville, and is in the Finance sector. The stock has seen a price change of 8.78% since the start of the year. The holding company for Stock Yards Bank & Trust Co. Is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.8%. This compares to the Banks - Southeast industry's yield of 1.55% and the S&P 500's yield of 1.92%.
Taking a look at the company's dividend growth, its current annualized dividend of $1 is up 4.2% from last year. In the past five-year period, Stock Yards Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.85%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Stock Yards's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SYBT expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $2.52 per share, which represents a year-over-year growth rate of 4.13%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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, SYBT presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Stock Yards Bancorp, Inc. (SYBT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research