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First Mid-Illinois Bancshares (FMBH) is a Top Dividend Stock Right Now: Should You Buy?
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
First Mid-Illinois Bancshares in Focus
First Mid-Illinois Bancshares (FMBH - Free Report) is headquartered in Mattoon, and is in the Finance sector. The stock has seen a price change of 18.09% since the start of the year. The bank holding company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 2.06%. This compares to the Banks - Northeast industry's yield of 2% and the S&P 500's yield of 1.33%.
In terms of dividend growth, the company's current annualized dividend of $0.82 is up 1.2% from last year. Over the last 5 years, First Mid-Illinois Bancshares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 19.70%. 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, First Mid-Illinois's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
FMBH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.47 per share, with earnings expected to increase 28.52% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. With that in mind, FMBH 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).
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First Mid-Illinois Bancshares (FMBH) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
First Mid-Illinois Bancshares in Focus
First Mid-Illinois Bancshares (FMBH - Free Report) is headquartered in Mattoon, and is in the Finance sector. The stock has seen a price change of 18.09% since the start of the year. The bank holding company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 2.06%. This compares to the Banks - Northeast industry's yield of 2% and the S&P 500's yield of 1.33%.
In terms of dividend growth, the company's current annualized dividend of $0.82 is up 1.2% from last year. Over the last 5 years, First Mid-Illinois Bancshares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 19.70%. 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, First Mid-Illinois's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
FMBH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.47 per share, with earnings expected to increase 28.52% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. With that in mind, FMBH 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).