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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
East West Bancorp in Focus
Headquartered in Pasadena, East West Bancorp (EWBC - Free Report) is a Finance stock that has seen a price change of -14.49% so far this year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2.38%. In comparison, the Banks - West industry's yield is 2.85%, while the S&P 500's yield is 1.72%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 21.2% from last year. In the past five-year period, East West Bancorp has increased its dividend 3 times on a year-over-year basis for an average annual increase of 15.34%. 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. Right now, East West Bancorp's payout ratio is 25%, which means it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EWBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.17 per share, representing a year-over-year earnings growth rate of 17.54%.
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. But, not every company offers 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, EWBC 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).
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
East West Bancorp in Focus
Headquartered in Pasadena, East West Bancorp (EWBC - Free Report) is a Finance stock that has seen a price change of -14.49% so far this year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2.38%. In comparison, the Banks - West industry's yield is 2.85%, while the S&P 500's yield is 1.72%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 21.2% from last year. In the past five-year period, East West Bancorp has increased its dividend 3 times on a year-over-year basis for an average annual increase of 15.34%. 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. Right now, East West Bancorp's payout ratio is 25%, which means it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EWBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.17 per share, representing a year-over-year earnings growth rate of 17.54%.
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. But, not every company offers 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, EWBC 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).
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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