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Agri Bank China (ACGBY) 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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

Agri Bank China in Focus

Agri Bank China (ACGBY - Free Report) is headquartered in Beijing, and is in the Finance sector. The stock has seen a price change of -8.08% since the start of the year. Currently paying a dividend of $0.6 per share, the company has a dividend yield of 7.24%. In comparison, the Banks - Foreign industry's yield is 1.98%, while the S&P 500's yield is 1.36%.

In terms of dividend growth, the company's current annualized dividend of $0.60 is up 13.6% from last year. In the past five-year period, Agri Bank China has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.07%. 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, Agri Bank China's payout ratio is 24%, which means it paid out 24% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ACGBY for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.46 per share, representing a year-over-year earnings growth rate of 14.95%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ACGBY 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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