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 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.
Glacier Bancorp in Focus
Headquartered in Kalispell, Glacier Bancorp (GBCI - Free Report) is a Finance stock that has seen a price change of 0.63% so far this year. The bank holding company is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.61% compared to the Banks - West industry's yield of 2.01% and the S&P 500's yield of 1.92%.
Looking at dividend growth, the company's 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 9.10%. 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. Glacier Bancorp's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GBCI for this fiscal year. The Zacks Consensus Estimate for 2019 is $2.43 per share, representing a year-over-year earnings growth rate of 11.98%.
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 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, 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).