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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
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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.
Horizon Bancorp in Focus
Headquartered in Michigan City, Horizon Bancorp (HBNC - Free Report) is a Finance stock that has seen a price change of 1.95% so far this year. Currently paying a dividend of $0.13 per share, the company has a dividend yield of 3.22%. In comparison, the Banks - Northeast industry's yield is 2.02%, while the S&P 500's yield is 1.35%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.52 is up 8.3% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.37%. 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. Horizon Bancorp's current payout ratio is 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBNC for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.77 per share, with earnings expected to increase 15.69% 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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HBNC 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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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
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.
Horizon Bancorp in Focus
Headquartered in Michigan City, Horizon Bancorp (HBNC - Free Report) is a Finance stock that has seen a price change of 1.95% so far this year. Currently paying a dividend of $0.13 per share, the company has a dividend yield of 3.22%. In comparison, the Banks - Northeast industry's yield is 2.02%, while the S&P 500's yield is 1.35%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.52 is up 8.3% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.37%. 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. Horizon Bancorp's current payout ratio is 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBNC for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.77 per share, with earnings expected to increase 15.69% 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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HBNC 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).