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Why Capital City Bank (CCBG) 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. However, 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.

Capital City Bank in Focus

Capital City Bank (CCBG - Free Report) is headquartered in Tallahassee, and is in the Finance sector. The stock has seen a price change of 3.41% since the start of the year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 2.34%. This compares to the Banks - Southeast industry's yield of 2.08% and the S&P 500's yield of 1.55%.

Looking at dividend growth, the company's current annualized dividend of $0.64 is up 3.2% from last year. Over the last 5 years, Capital City Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 25.86%. 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. Capital City Bank's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for CCBG for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.18 per share, representing a year-over-year earnings growth rate of 10.10%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 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 CCBG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).


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