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Is Associated Banc-Corp (ASB) a Good Pick for Income Investors?
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Associated Banc-Corp in Focus
Based in Green Bay, Associated Banc-Corp (ASB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 6.3%. The bank holding company is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 2.22% compared to the Banks - Midwest industry's yield of 1.87% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 20% from last year. Associated Banc-Corp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.05%. 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. Associated Banc-Corp's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ASB for this fiscal year. The Zacks Consensus Estimate for 2018 is $2.04 per share, representing a year-over-year earnings growth rate of 34.21%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ASB 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).
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Is Associated Banc-Corp (ASB) a Good Pick for Income Investors?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Associated Banc-Corp in Focus
Based in Green Bay, Associated Banc-Corp (ASB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 6.3%. The bank holding company is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 2.22% compared to the Banks - Midwest industry's yield of 1.87% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 20% from last year. Associated Banc-Corp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.05%. 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. Associated Banc-Corp's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ASB for this fiscal year. The Zacks Consensus Estimate for 2018 is $2.04 per share, representing a year-over-year earnings growth rate of 34.21%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ASB 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).