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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Financial Bankshares in Focus
First Financial Bankshares (FFIN - Free Report) is headquartered in Abilene, and is in the Finance sector. The stock has seen a price change of 4.19% since the start of the year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2.28%. In comparison, the Banks - Southwest industry's yield is 0.9%, while the S&P 500's yield is 1.56%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 1.4% from last year. In the past five-year period, First Financial Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.95%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Financial's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
FFIN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.45 per share, which represents a year-over-year growth rate of 4.32%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FFIN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.
Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”
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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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Financial Bankshares in Focus
First Financial Bankshares (FFIN - Free Report) is headquartered in Abilene, and is in the Finance sector. The stock has seen a price change of 4.19% since the start of the year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2.28%. In comparison, the Banks - Southwest industry's yield is 0.9%, while the S&P 500's yield is 1.56%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 1.4% from last year. In the past five-year period, First Financial Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.95%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Financial's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
FFIN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.45 per share, which represents a year-over-year growth rate of 4.32%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FFIN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Top 5 ChatGPT Stocks Revealed
Zacks Senior Stock Strategist, Kevin Cook names 5 hand-picked stocks with sky-high growth potential in a brilliant sector of Artificial Intelligence. By 2030, the AI industry is predicted to have an internet and iPhone-scale economic impact of $15.7 Trillion.
Today you can invest in the wave of the future, an automation that answers follow-up questions … admits mistakes … challenges incorrect premises … rejects inappropriate requests. As one of the selected companies puts it, “Automation frees people from the mundane so they can accomplish the miraculous.”
Download Free ChatGPT Stock Report Right Now >>
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