We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Farmers National Banc (FMNB) a Great Dividend Play?
Read MoreHide Full Article
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Farmers National Banc in Focus
Based in Canfield, Farmers National Banc (FMNB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 45.5%. Currently paying a dividend of $2.08 per share, the company has a dividend yield of 27%. In comparison, the Banks - Midwest industry's yield is 27.78%, while the S&P 500's yield is 0.08%.
Looking at dividend growth, the company's current annualized dividend of $1.58 is up 21.5% from last year. In the past five-year period, Farmers National Banc has increased its dividend 40 times on a year-over-year basis for an average annual increase of 3%. 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. Farmers National's current payout ratio is 4.41%. This means it paid out 4.41% of its trailing 12-month EPS as dividend.
FMNB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $0.32 per share, representing a year-over-year earnings growth rate of 1.25%.
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 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 FMNB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Farmers National Banc (FMNB) a Great Dividend Play?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Farmers National Banc in Focus
Based in Canfield, Farmers National Banc (FMNB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 45.5%. Currently paying a dividend of $2.08 per share, the company has a dividend yield of 27%. In comparison, the Banks - Midwest industry's yield is 27.78%, while the S&P 500's yield is 0.08%.
Looking at dividend growth, the company's current annualized dividend of $1.58 is up 21.5% from last year. In the past five-year period, Farmers National Banc has increased its dividend 40 times on a year-over-year basis for an average annual increase of 3%. 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. Farmers National's current payout ratio is 4.41%. This means it paid out 4.41% of its trailing 12-month EPS as dividend.
FMNB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $0.32 per share, representing a year-over-year earnings growth rate of 1.25%.
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 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 FMNB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).