Markets

Are You Looking for a High-Growth Dividend Stock? BancFirst (BANF) Could Be a Great Choice

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 that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

BancFirst in Focus

BancFirst (BANF) is headquartered in Oklahoma City, and is in the Finance sector. The stock has seen a price change of 7.76% since the start of the year. The Oklahoma financial services holding company is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 2.23% compared to the Banks - Southwest industry's yield of 1.45% and the S&P 500's yield of 1.96%.

In terms of dividend growth, the company's current annualized dividend of $1.20 is up 17.6% from last year. In the past five-year period, BancFirst has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.22%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, BancFirst's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.

BANF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.99 per share, which represents a year-over-year growth rate of 4.45%.

Bottom Line

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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BANF is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).


Click to get this free report

BancFirst Corporation (BANF): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos