Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Salisbury Bancorp in Focus
Headquartered in Lakeville, Salisbury Bancorp is a Finance stock that has seen a price change of 3.71% so far this year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 2.25%. In comparison, the Banks - Northeast industry's yield is 2.13%, while the S&P 500's yield is 1.42%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 5.8% from last year. Over the last 5 years, Salisbury Bancorp has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.91%. 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, Salisbury Bancorp's payout ratio is 22%, which means it paid out 22% of its trailing 12-month EPS as dividend.
SAL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.08 per share, representing a year-over-year earnings growth rate of 6.29%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that SAL is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Image: Bigstock
This is Why Salisbury Bancorp (SAL) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Salisbury Bancorp in Focus
Headquartered in Lakeville, Salisbury Bancorp is a Finance stock that has seen a price change of 3.71% so far this year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 2.25%. In comparison, the Banks - Northeast industry's yield is 2.13%, while the S&P 500's yield is 1.42%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 5.8% from last year. Over the last 5 years, Salisbury Bancorp has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.91%. 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, Salisbury Bancorp's payout ratio is 22%, which means it paid out 22% of its trailing 12-month EPS as dividend.
SAL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.08 per share, representing a year-over-year earnings growth rate of 6.29%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that SAL is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).