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Farmers & Merchants Bancorp Inc. (FMAO) is a Top Dividend Stock Right Now: Should You Buy?
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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 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
Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is headquartered in Archbold, and is in the Finance sector. The stock has seen a price change of 0.22% since the start of the year. Currently paying a dividend of $0.17 per share, the company has a dividend yield of 2.95%. In comparison, the Banks - Northeast industry's yield is 2.03%, while the S&P 500's yield is 1.48%.
Looking at 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 9.96%. 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, Farmers & Merchants Bancorp Inc.'s payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMAO for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.85 per share, with earnings expected to increase 10.12% 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. 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. That said, they can take comfort from the fact that FMAO 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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Farmers & Merchants Bancorp Inc. (FMAO) is a Top Dividend Stock Right Now: Should You Buy?
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 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
Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is headquartered in Archbold, and is in the Finance sector. The stock has seen a price change of 0.22% since the start of the year. Currently paying a dividend of $0.17 per share, the company has a dividend yield of 2.95%. In comparison, the Banks - Northeast industry's yield is 2.03%, while the S&P 500's yield is 1.48%.
Looking at 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 9.96%. 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, Farmers & Merchants Bancorp Inc.'s payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMAO for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.85 per share, with earnings expected to increase 10.12% 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. 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. That said, they can take comfort from the fact that FMAO is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).