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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
First Merchants (FRME - Free Report) is headquartered in Muncie, and is in the Finance sector. The stock has seen a price change of -6.14% since the start of the year. The bank is paying out a dividend of $0.36 per share at the moment, with a dividend yield of 3.85% compared to the Banks - Midwest industry's yield of 3.04% and the S&P 500's yield of 1.49%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 3.6% from last year. Over the last 5 years, First Merchants has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.24%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Merchants's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FRME expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.84 per share, which represents a year-over-year growth rate of 10.66%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious 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 FRME 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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First Merchants (FRME) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
First Merchants (FRME - Free Report) is headquartered in Muncie, and is in the Finance sector. The stock has seen a price change of -6.14% since the start of the year. The bank is paying out a dividend of $0.36 per share at the moment, with a dividend yield of 3.85% compared to the Banks - Midwest industry's yield of 3.04% and the S&P 500's yield of 1.49%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 3.6% from last year. Over the last 5 years, First Merchants has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.24%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Merchants's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FRME expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.84 per share, which represents a year-over-year growth rate of 10.66%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious 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 FRME is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).