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Why TrustCo Bank (TRST) is a Great Dividend Stock Right Now
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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 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.
TrustCo Bank in Focus
Based in Glenville, TrustCo Bank (TRST - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -9.07%. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 4.62%. In comparison, the Banks - Northeast industry's yield is 2.42%, while the S&P 500's yield is 1.68%.
Looking at dividend growth, the company's current annualized dividend of $1.40 is up 2% from last year. TrustCo Bank has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 1.14%. 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. Right now, TrustCo's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.
TRST is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.35 per share, representing a year-over-year earnings growth rate of 5.02%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TRST presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Why TrustCo Bank (TRST) is a Great Dividend Stock Right Now
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 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.
TrustCo Bank in Focus
Based in Glenville, TrustCo Bank (TRST - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -9.07%. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 4.62%. In comparison, the Banks - Northeast industry's yield is 2.42%, while the S&P 500's yield is 1.68%.
Looking at dividend growth, the company's current annualized dividend of $1.40 is up 2% from last year. TrustCo Bank has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 1.14%. 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. Right now, TrustCo's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.
TRST is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.35 per share, representing a year-over-year earnings growth rate of 5.02%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TRST presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).