Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Investors Bancorp in Focus
Headquartered in Short Hills, Investors Bancorp is a Finance stock that has seen a price change of 19.51% so far this year. The holding company for Investors Bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 4.44%. This compares to the Financial - Savings and Loan industry's yield of 2.6% and the S&P 500's yield of 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 16.7% from last year. Investors Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 16.52%. 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. Investors Bancorp's current payout ratio is 51%, meaning it paid out 51% of its trailing 12-month EPS as dividend.
ISBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.16 per share, with earnings expected to increase 23.40% from the year ago period.
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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that ISBC 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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Are You Looking for a High-Growth Dividend Stock? Investors Bancorp (ISBC) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Investors Bancorp in Focus
Headquartered in Short Hills, Investors Bancorp is a Finance stock that has seen a price change of 19.51% so far this year. The holding company for Investors Bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 4.44%. This compares to the Financial - Savings and Loan industry's yield of 2.6% and the S&P 500's yield of 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 16.7% from last year. Investors Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 16.52%. 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. Investors Bancorp's current payout ratio is 51%, meaning it paid out 51% of its trailing 12-month EPS as dividend.
ISBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.16 per share, with earnings expected to increase 23.40% from the year ago period.
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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that ISBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).