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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.
East West Bancorp in Focus
Based in Pasadena, East West Bancorp (EWBC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -5.41%. The bank holding company is currently shelling out a dividend of $0.4 per share, with a dividend yield of 2.15%. This compares to the Banks - West industry's yield of 2.69% and the S&P 500's yield of 1.53%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 21.2% from last year. In the past five-year period, East West Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 14.48%. 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. East West Bancorp's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EWBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.01 per share, with earnings expected to increase 14.92% 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. It's important to keep in mind that not all companies provide 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 EWBC 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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East West Bancorp (EWBC) Could Be a Great Choice
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.
East West Bancorp in Focus
Based in Pasadena, East West Bancorp (EWBC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -5.41%. The bank holding company is currently shelling out a dividend of $0.4 per share, with a dividend yield of 2.15%. This compares to the Banks - West industry's yield of 2.69% and the S&P 500's yield of 1.53%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 21.2% from last year. In the past five-year period, East West Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 14.48%. 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. East West Bancorp's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EWBC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.01 per share, with earnings expected to increase 14.92% 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. It's important to keep in mind that not all companies provide 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 EWBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).