All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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 40.91% so far this year. The holding company for Investors Bank is currently shelling out a dividend of $0.14 per share, with a dividend yield of 3.76%. This compares to the Financial - Savings and Loan industry's yield of 2.37% and the S&P 500's yield of 1.39%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 16.7% from last year. In the past five-year period, Investors Bancorp has increased its dividend 4 times on a year-over-year basis 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.
Looking at this fiscal year, ISBC expects solid earnings growth. 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. However, not all companies offer 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. 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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This is Why Investors Bancorp (ISBC) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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 40.91% so far this year. The holding company for Investors Bank is currently shelling out a dividend of $0.14 per share, with a dividend yield of 3.76%. This compares to the Financial - Savings and Loan industry's yield of 2.37% and the S&P 500's yield of 1.39%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 16.7% from last year. In the past five-year period, Investors Bancorp has increased its dividend 4 times on a year-over-year basis 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.
Looking at this fiscal year, ISBC expects solid earnings growth. 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. However, not all companies offer 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. 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).