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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Glacier Bancorp in Focus
Glacier Bancorp (GBCI - Free Report) is headquartered in Kalispell, and is in the Finance sector. The stock has seen a price change of 1.14% since the start of the year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.6%. In comparison, the Banks - West industry's yield is 1.97%, while the S&P 500's yield is 1.93%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.04 is up 3% from last year. Over the last 5 years, Glacier Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.85%. 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. Right now, Glacier Bancorp's payout ratio is 48%, which means it paid out 48% of its trailing 12-month EPS as dividend.
GBCI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $2.45 per share, with earnings expected to increase 12.90% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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, GBCI 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).