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 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.
WesBanco in Focus
WesBanco (WSBC - Free Report) is headquartered in Wheeling, and is in the Finance sector. The stock has seen a price change of 9.89% since the start of the year. The holding company for WesBanco Bank is currently shelling out a dividend of $0.29 per share, with a dividend yield of 3.08%. This compares to the Banks - Southeast industry's yield of 1.62% and the S&P 500's yield of 1.97%.
In terms of dividend growth, the company's current annualized dividend of $1.24 is up 6.9% from last year. Over the last 5 years, WesBanco has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.71%. 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. WesBanco's current payout ratio is 36%. This means it paid out 36% of its trailing 12-month EPS as dividend.
WSBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.29 per share, representing a year-over-year earnings growth rate of 2.49%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, WSBC 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).