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.
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.
First Midwest Bancorp in Focus
Based in Chicago, First Midwest Bancorp is in the Finance sector, and so far this year, shares have seen a price change of 5.4%. The holding company for First Midwest Bank is currently shelling out a dividend of $0.14 per share, with a dividend yield of 2.68%. This compares to the Banks - Midwest industry's yield of 2.57% and the S&P 500's yield of 1.88%.
In terms of dividend growth, the company's current annualized dividend of $0.56 is up 24.4% from last year. In the past five-year period, First Midwest Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 9.46%. 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 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FMBI expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $1.96 per share, which represents a year-over-year growth rate of 17.37%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. 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, 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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Are You Looking for a High-Growth Dividend Stock? First Midwest Bancorp (FMBI) Could Be a Great Choice
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.
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.
First Midwest Bancorp in Focus
Based in Chicago, First Midwest Bancorp is in the Finance sector, and so far this year, shares have seen a price change of 5.4%. The holding company for First Midwest Bank is currently shelling out a dividend of $0.14 per share, with a dividend yield of 2.68%. This compares to the Banks - Midwest industry's yield of 2.57% and the S&P 500's yield of 1.88%.
In terms of dividend growth, the company's current annualized dividend of $0.56 is up 24.4% from last year. In the past five-year period, First Midwest Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 9.46%. 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 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FMBI expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $1.96 per share, which represents a year-over-year growth rate of 17.37%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. 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, 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).