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Why Cathay General (CATY) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of 1% so far this year. The holding company for Cathay Bank is paying out a dividend of $0.34 per share at the moment, with a dividend yield of 3.13% compared to the Banks - West industry's yield of 2.36% and the S&P 500's yield of 1.45%.
In terms of dividend growth, the company's current annualized dividend of $1.36 is up 7.1% from last year. Over the last 5 years, Cathay General has increased its dividend 3 times on a year-over-year basis for an average annual increase of 9.32%. 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. Cathay's current payout ratio is 36%. This means it paid out 36% of its trailing 12-month EPS as dividend.
CATY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.09 per share, representing a year-over-year earnings growth rate of 7.63%.
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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that CATY 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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Why Cathay General (CATY) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of 1% so far this year. The holding company for Cathay Bank is paying out a dividend of $0.34 per share at the moment, with a dividend yield of 3.13% compared to the Banks - West industry's yield of 2.36% and the S&P 500's yield of 1.45%.
In terms of dividend growth, the company's current annualized dividend of $1.36 is up 7.1% from last year. Over the last 5 years, Cathay General has increased its dividend 3 times on a year-over-year basis for an average annual increase of 9.32%. 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. Cathay's current payout ratio is 36%. This means it paid out 36% of its trailing 12-month EPS as dividend.
CATY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.09 per share, representing a year-over-year earnings growth rate of 7.63%.
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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that CATY is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).