Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Farmers & Merchants Bancorp Inc. In Focus
Headquartered in Archbold, Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is a Finance stock that has seen a price change of -1.43% so far this year. Currently paying a dividend of $0.17 per share, the company has a dividend yield of 3%. In comparison, the Banks - Northeast industry's yield is 1.95%, while the S&P 500's yield is 1.37%.
In terms of dividend growth, the company's current annualized dividend of $0.68 is up 3% from last year. Farmers & Merchants Bancorp Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.47%. 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 & Merchants Bancorp Inc.'s current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
FMAO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.91 per share, with earnings expected to increase 13.69% 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FMAO 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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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Farmers & Merchants Bancorp Inc. In Focus
Headquartered in Archbold, Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is a Finance stock that has seen a price change of -1.43% so far this year. Currently paying a dividend of $0.17 per share, the company has a dividend yield of 3%. In comparison, the Banks - Northeast industry's yield is 1.95%, while the S&P 500's yield is 1.37%.
In terms of dividend growth, the company's current annualized dividend of $0.68 is up 3% from last year. Farmers & Merchants Bancorp Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.47%. 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 & Merchants Bancorp Inc.'s current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
FMAO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.91 per share, with earnings expected to increase 13.69% 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FMAO 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).
Buy 5 Stocks BEFORE Election Day
Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins).
Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement.
They include a medical manufacturer that gained +11,000% in the last 15 years… a rental company absolutely crushing its sector… an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract… and a giant chipmaker building huge plants in the U.S.
Don’t Wait. Download FREE >>
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