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Why Capital City Bank (CCBG) 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.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

Capital City Bank in Focus

Based in Tallahassee, Capital City Bank (CCBG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 17.84%. The bank holding company is currently shelling out a dividend of $0.17 per share, with a dividend yield of 2.19%. This compares to the Banks - Southeast industry's yield of 2.16% and the S&P 500's yield of 1.87%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.68 is up 9.7% from last year. In the past five-year period, Capital City Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 22.25%. 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, Capital City Bank's payout ratio is 0%, which means it paid out 0% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, CCBG expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $2.41 per share, which represents a year-over-year growth rate of 21.72%.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CCBG 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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