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Why The First of Long Island (FLIC) is a Top Dividend Stock for Your Portfolio
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
The First of Long Island in Focus
The First of Long Island (FLIC - Free Report) is headquartered in Melville, and is in the Finance sector. The stock has seen a price change of -15.66% since the start of the year. The holding company for The First National Bank of Long Island is currently shelling out a dividend of $0.21 per share, with a dividend yield of 4.61%. This compares to the Banks - Northeast industry's yield of 2.58% and the S&P 500's yield of 1.78%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.84 is up 9.1% from last year. In the past five-year period, The First of Long Island has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.83%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. The First of Long Island's current payout ratio is 42%. This means it paid out 42% of its trailing 12-month EPS as dividend.
FLIC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.07 per share, with earnings expected to increase 14.36% from the year ago period.
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.
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. With that in mind, FLIC 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).