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Why Home BancShares (HOMB) is a Top Dividend Stock
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Home BancShares in Focus
Based in Conway, Home BancShares (HOMB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -3.18%. The bank holding company is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.13% compared to the Banks - Southeast industry's yield of 1.26% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 20% from last year. In the past five-year period, Home BancShares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 29.31%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Home BancShares's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.
HOMB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $1.77 per share, which represents a year-over-year growth rate of 31.11%.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HOMB 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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Why Home BancShares (HOMB) is a Top Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Home BancShares in Focus
Based in Conway, Home BancShares (HOMB - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -3.18%. The bank holding company is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.13% compared to the Banks - Southeast industry's yield of 1.26% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 20% from last year. In the past five-year period, Home BancShares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 29.31%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Home BancShares's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.
HOMB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $1.77 per share, which represents a year-over-year growth rate of 31.11%.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HOMB 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).