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Why Essa Bancorp (ESSA) is a Great Dividend Stock Right Now
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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. However, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essa Bancorp in Focus
Essa Bancorp (ESSA - Free Report) is headquartered in Stroudsburg, and is in the Finance sector. The stock has seen a price change of 20.25% since the start of the year. Currently paying a dividend of $0.15 per share, the company has a dividend yield of 2.88%. In comparison, the Financial - Savings and Loan industry's yield is 2.75%, while the S&P 500's yield is 1.67%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 11.1% from last year. Over the last 5 years, Essa Bancorp has increased its dividend 4 times on a year-over-year basis 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%. This means it paid out 29% of its trailing 12-month EPS as dividend.
ESSA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.19 per share, representing a year-over-year earnings growth rate of 6.31%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 ESSA is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why Essa Bancorp (ESSA) is a Great Dividend Stock Right Now
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essa Bancorp in Focus
Essa Bancorp (ESSA - Free Report) is headquartered in Stroudsburg, and is in the Finance sector. The stock has seen a price change of 20.25% since the start of the year. Currently paying a dividend of $0.15 per share, the company has a dividend yield of 2.88%. In comparison, the Financial - Savings and Loan industry's yield is 2.75%, while the S&P 500's yield is 1.67%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 11.1% from last year. Over the last 5 years, Essa Bancorp has increased its dividend 4 times on a year-over-year basis 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%. This means it paid out 29% of its trailing 12-month EPS as dividend.
ESSA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.19 per share, representing a year-over-year earnings growth rate of 6.31%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 ESSA is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).