We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
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 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.
First Merchants in Focus
First Merchants (FRME - Free Report) is headquartered in Muncie, and is in the Finance sector. The stock has seen a price change of -2.41% since the start of the year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 3.13%. In comparison, the Banks - Midwest industry's yield is 2.9%, while the S&P 500's yield is 1.68%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.28 is up 13.3% from last year. In the past five-year period, First Merchants has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.27%. 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. First Merchants's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
FRME is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.15 per share, representing a year-over-year earnings growth rate of 8.92%.
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. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FRME is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Are You Looking for a High-Growth Dividend Stock?
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 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.
First Merchants in Focus
First Merchants (FRME - Free Report) is headquartered in Muncie, and is in the Finance sector. The stock has seen a price change of -2.41% since the start of the year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 3.13%. In comparison, the Banks - Midwest industry's yield is 2.9%, while the S&P 500's yield is 1.68%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.28 is up 13.3% from last year. In the past five-year period, First Merchants has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.27%. 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. First Merchants's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
FRME is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.15 per share, representing a year-over-year earnings growth rate of 8.92%.
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. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FRME is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).