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Why German American Bancorp (GABC) is a Top Dividend Stock for Your Portfolio
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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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
German American Bancorp in Focus
German American Bancorp (GABC - Free Report) is headquartered in Jasper, and is in the Finance sector. The stock has seen a price change of -3.77% since the start of the year. The financial services holding company is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.45% compared to the Banks - Midwest industry's yield of 2.79% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 9.5% from last year. In the past five-year period, German American Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.27%. 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, German American Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
GABC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.24 per share, with earnings expected to increase 2.21% 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. However, not all companies offer 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. That said, they can take comfort from the fact that GABC 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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Why German American Bancorp (GABC) is a Top Dividend Stock for Your Portfolio
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
German American Bancorp in Focus
German American Bancorp (GABC - Free Report) is headquartered in Jasper, and is in the Finance sector. The stock has seen a price change of -3.77% since the start of the year. The financial services holding company is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.45% compared to the Banks - Midwest industry's yield of 2.79% and the S&P 500's yield of 1.68%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 9.5% from last year. In the past five-year period, German American Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.27%. 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, German American Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
GABC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.24 per share, with earnings expected to increase 2.21% 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. However, not all companies offer 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. That said, they can take comfort from the fact that GABC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).