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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. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Tompkins Financial in Focus
Based in Ithaca, Tompkins Financial (TMP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -5.93%. The financial services company is currently shelling out a dividend of $0.57 per share, with a dividend yield of 2.9%. This compares to the Banks - Northeast industry's yield of 2.58% and the S&P 500's yield of 1.78%.
Looking at dividend growth, the company's current annualized dividend of $2.28 is up 4.1% from last year. Over the last 5 years, Tompkins Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.26%. 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. Tompkins's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
TMP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.19 per share, representing a year-over-year earnings growth rate of 2.31%.
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. It's important to keep in mind that not all companies provide 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. 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 TMP 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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Tompkins Financial (TMP) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Tompkins Financial in Focus
Based in Ithaca, Tompkins Financial (TMP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -5.93%. The financial services company is currently shelling out a dividend of $0.57 per share, with a dividend yield of 2.9%. This compares to the Banks - Northeast industry's yield of 2.58% and the S&P 500's yield of 1.78%.
Looking at dividend growth, the company's current annualized dividend of $2.28 is up 4.1% from last year. Over the last 5 years, Tompkins Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.26%. 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. Tompkins's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
TMP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.19 per share, representing a year-over-year earnings growth rate of 2.31%.
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. It's important to keep in mind that not all companies provide 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. 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 TMP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).