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Southside Bancshares (SBSI) is a Top Dividend Stock Right Now: Should You Buy?

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.

Southside Bancshares in Focus

Based in Tyler, Southside Bancshares (SBSI - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -6.45%. Currently paying a dividend of $0.37 per share, the company has a dividend yield of 4.91%. In comparison, the Banks - Southwest industry's yield is 0.61%, while the S&P 500's yield is 1.59%.

Looking at dividend growth, the company's current annualized dividend of $1.44 is up 1.4% from last year. Over the last 5 years, Southside Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.45%. 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. Southside Bancshares's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.

SBSI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.86 per share, representing a year-over-year earnings growth rate of 0.70%.

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. But, not every company offers 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SBSI 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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