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Why Essa Bancorp (ESSA) 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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Essa Bancorp in Focus
Essa Bancorp (ESSA - Free Report) is headquartered in Stroudsburg, and is in the Finance sector. The stock has seen a price change of -4.15% since the start of the year. The bank is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 3.61% compared to the Financial - Savings and Loan industry's yield of 2.69% and the S&P 500's yield of 1.73%.
Looking at dividend growth, the company's current annualized dividend of $0.60 is up 27.7% from last year. Over the last 5 years, Essa Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 9.08%. 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. Essa Bancorp's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
ESSA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $1.82 per share, which represents a year-over-year growth rate of 10.30%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that ESSA 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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Why Essa Bancorp (ESSA) 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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Essa Bancorp in Focus
Essa Bancorp (ESSA - Free Report) is headquartered in Stroudsburg, and is in the Finance sector. The stock has seen a price change of -4.15% since the start of the year. The bank is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 3.61% compared to the Financial - Savings and Loan industry's yield of 2.69% and the S&P 500's yield of 1.73%.
Looking at dividend growth, the company's current annualized dividend of $0.60 is up 27.7% from last year. Over the last 5 years, Essa Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 9.08%. 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. Essa Bancorp's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
ESSA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $1.82 per share, which represents a year-over-year growth rate of 10.30%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that ESSA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).