All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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.
First Midwest Bancorp in Focus
First Midwest Bancorp is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 0.25% since the start of the year. The holding company for First Midwest Bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.42%. This compares to the Banks - Midwest industry's yield of 2.49% and the S&P 500's yield of 1.99%.
In terms of dividend growth, the company's current annualized dividend of $0.48 is up 6.7% from last year. Over the last 5 years, First Midwest Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.59%. 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. Right now, First Midwest Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMBI for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.98 per share, with earnings expected to increase 18.56% from the year ago period.
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. However, not all companies offer 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. With that in mind, FMBI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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First Midwest Bancorp (FMBI) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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.
First Midwest Bancorp in Focus
First Midwest Bancorp is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 0.25% since the start of the year. The holding company for First Midwest Bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.42%. This compares to the Banks - Midwest industry's yield of 2.49% and the S&P 500's yield of 1.99%.
In terms of dividend growth, the company's current annualized dividend of $0.48 is up 6.7% from last year. Over the last 5 years, First Midwest Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.59%. 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. Right now, First Midwest Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMBI for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.98 per share, with earnings expected to increase 18.56% from the year ago period.
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. However, not all companies offer 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. With that in mind, FMBI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).