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Why 1st Source (SRCE) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
1st Source in Focus
Based in South Bend, 1st Source (SRCE - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -12.78%. The holding company for 1st Source Bank is paying out a dividend of $0.29 per share at the moment, with a dividend yield of 2.56% compared to the Banks - Midwest industry's yield of 2.53% and the S&P 500's yield of 1.88%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.16 is up 5.5% from last year. 1st Source has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 13.49%. 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. 1st Source's current payout ratio is 32%, meaning it paid out 32% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SRCE for this fiscal year. The Zacks Consensus Estimate for 2020 is $3.62 per share, representing a year-over-year earnings growth rate of 1.40%.
Bottom Line
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.
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. 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, SRCE 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).
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Why 1st Source (SRCE) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
1st Source in Focus
Based in South Bend, 1st Source (SRCE - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -12.78%. The holding company for 1st Source Bank is paying out a dividend of $0.29 per share at the moment, with a dividend yield of 2.56% compared to the Banks - Midwest industry's yield of 2.53% and the S&P 500's yield of 1.88%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.16 is up 5.5% from last year. 1st Source has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 13.49%. 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. 1st Source's current payout ratio is 32%, meaning it paid out 32% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SRCE for this fiscal year. The Zacks Consensus Estimate for 2020 is $3.62 per share, representing a year-over-year earnings growth rate of 1.40%.
Bottom Line
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.
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. 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, SRCE 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).