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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 when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Essa Bancorp in Focus
Based in Stroudsburg, Essa Bancorp (ESSA - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 23.77%. The bank is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 2.8% compared to the Financial - Savings and Loan industry's yield of 2.59% and the S&P 500's yield of 1.61%.
In terms of dividend growth, the company's current annualized dividend of $0.60 is up 11.1% from last year. Essa Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 10.05%. 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. Essa Bancorp's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ESSA for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.20 per share, which represents a year-over-year growth rate of 6.80%.
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. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ESSA presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Essa Bancorp (ESSA) 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 when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Essa Bancorp in Focus
Based in Stroudsburg, Essa Bancorp (ESSA - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 23.77%. The bank is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 2.8% compared to the Financial - Savings and Loan industry's yield of 2.59% and the S&P 500's yield of 1.61%.
In terms of dividend growth, the company's current annualized dividend of $0.60 is up 11.1% from last year. Essa Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 10.05%. 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. Essa Bancorp's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for ESSA for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.20 per share, which represents a year-over-year growth rate of 6.80%.
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. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, ESSA presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).