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Why Summit Financial (SMMF) is a Top Dividend Stock for Your Portfolio
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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Summit Financial in Focus
Summit Financial (SMMF - Free Report) is headquartered in Moorefield, and is in the Finance sector. The stock has seen a price change of -1.75% since the start of the year. The financial holding company is currently shelling out a dividend of $0.18 per share, with a dividend yield of 2.67%. This compares to the Banks - Southeast industry's yield of 2.13% and the S&P 500's yield of 1.5%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 2.9% from last year. In the past five-year period, Summit Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.66%. 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. Summit Financial's current payout ratio is 20%. This means it paid out 20% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SMMF expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $3.89 per share, with earnings expected to increase 12.10% 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. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 SMMF 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 Summit Financial (SMMF) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Summit Financial in Focus
Summit Financial (SMMF - Free Report) is headquartered in Moorefield, and is in the Finance sector. The stock has seen a price change of -1.75% since the start of the year. The financial holding company is currently shelling out a dividend of $0.18 per share, with a dividend yield of 2.67%. This compares to the Banks - Southeast industry's yield of 2.13% and the S&P 500's yield of 1.5%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 2.9% from last year. In the past five-year period, Summit Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.66%. 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. Summit Financial's current payout ratio is 20%. This means it paid out 20% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SMMF expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $3.89 per share, with earnings expected to increase 12.10% 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. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 SMMF is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).