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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Camden National in Focus
Based in Camden, Camden National (CAC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 27.19%. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.62%. In comparison, the Banks - Northeast industry's yield is 1.71%, while the S&P 500's yield is 1.95%.
Looking at dividend growth, the company's current annualized dividend of $1.20 is up 9.1% from last year. Camden National has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 11.02%. 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. Right now, Camden National's payout ratio is 34%, which means it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CAC expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $3.75 per share, which represents a year-over-year growth rate of 10.62%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CAC 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).