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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Horizon Bancorp in Focus
Horizon Bancorp (HBNC - Free Report) is headquartered in Michigan City, and is in the Finance sector. The stock has seen a price change of -16.69% since the start of the year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 3.68%. This compares to the Banks - Northeast industry's yield of 2.48% and the S&P 500's yield of 1.72%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 20.8% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 12.39%. 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. Horizon Bancorp's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.
HBNC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.18 per share, representing a year-over-year earnings growth rate of 9%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HBNC 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 >>
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Horizon Bancorp in Focus
Horizon Bancorp (HBNC - Free Report) is headquartered in Michigan City, and is in the Finance sector. The stock has seen a price change of -16.69% since the start of the year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 3.68%. This compares to the Banks - Northeast industry's yield of 2.48% and the S&P 500's yield of 1.72%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 20.8% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 12.39%. 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. Horizon Bancorp's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.
HBNC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.18 per share, representing a year-over-year earnings growth rate of 9%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HBNC 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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