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Lakeland Financial (LKFN) is a Top Dividend Stock Right Now: Should You Buy?

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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 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.

Lakeland Financial in Focus

Lakeland Financial (LKFN - Free Report) is headquartered in Warsaw, and is in the Finance sector. The stock has seen a price change of -12.79% since the start of the year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2.29%. In comparison, the Banks - Midwest industry's yield is 2.7%, while the S&P 500's yield is 1.54%.

In terms of dividend growth, the company's current annualized dividend of $1.60 is up 17.6% from last year. Lakeland Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 14.67%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Lakeland Financial's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, LKFN expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $3.86 per share, which represents a year-over-year growth rate of 3.21%.

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 must be conscious 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 LKFN 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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