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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Horizon Bancorp in Focus
Headquartered in Michigan City, Horizon Bancorp (HBNC - Free Report) is a Finance stock that has seen a price change of -9.74% so far this year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 3.4%. This compares to the Banks - Northeast industry's yield of 2.49% and the S&P 500's yield of 1.68%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 20.8% from last year. Over the last 5 years, Horizon Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.39%. 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, Horizon Bancorp's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
HBNC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.31 per share, with earnings expected to increase 15.50% 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, HBNC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Horizon Bancorp in Focus
Headquartered in Michigan City, Horizon Bancorp (HBNC - Free Report) is a Finance stock that has seen a price change of -9.74% so far this year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 3.4%. This compares to the Banks - Northeast industry's yield of 2.49% and the S&P 500's yield of 1.68%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 20.8% from last year. Over the last 5 years, Horizon Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.39%. 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, Horizon Bancorp's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
HBNC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.31 per share, with earnings expected to increase 15.50% 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, HBNC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).