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Why Farmers & Merchants Bancorp Inc. (FMAO) is a Great Dividend Stock Right Now
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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 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 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.
Farmers & Merchants Bancorp Inc. In Focus
Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is headquartered in Archbold, and is in the Finance sector. The stock has seen a price change of -0.64% since the start of the year. The company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 2.33%. This compares to the Banks - Northeast industry's yield of 2.48% and the S&P 500's yield of 1.72%.
In terms of dividend growth, the company's current annualized dividend of $0.76 is up 7% from last year. Over the last 5 years, Farmers & Merchants Bancorp Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.65%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Farmers & Merchants Bancorp Inc.'s payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMAO for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.57 per share, with earnings expected to increase 12.72% from the year ago period.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FMAO is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Farmers & Merchants Bancorp Inc. (FMAO) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Farmers & Merchants Bancorp Inc. In Focus
Farmers & Merchants Bancorp Inc. (FMAO - Free Report) is headquartered in Archbold, and is in the Finance sector. The stock has seen a price change of -0.64% since the start of the year. The company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 2.33%. This compares to the Banks - Northeast industry's yield of 2.48% and the S&P 500's yield of 1.72%.
In terms of dividend growth, the company's current annualized dividend of $0.76 is up 7% from last year. Over the last 5 years, Farmers & Merchants Bancorp Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.65%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Farmers & Merchants Bancorp Inc.'s payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMAO for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.57 per share, with earnings expected to increase 12.72% from the year ago period.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FMAO is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).