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Why Independent Bank (IBCP) is a Top Dividend Stock for Your Portfolio
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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.
Independent Bank in Focus
Independent Bank (IBCP - Free Report) is headquartered in Grand Rapids, and is in the Finance sector. The stock has seen a price change of -16.73% since the start of the year. The bank holding company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 4.24%. This compares to the Banks - Midwest industry's yield of 2.67% and the S&P 500's yield of 2.08%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 11.1% from last year. In the past five-year period, Independent Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 29.56%. 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. Independent Bank's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for IBCP for this fiscal year. The Zacks Consensus Estimate for 2020 is $2.04 per share, with earnings expected to increase 2% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that IBCP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Independent Bank (IBCP) is a Top Dividend Stock for Your Portfolio
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.
Independent Bank in Focus
Independent Bank (IBCP - Free Report) is headquartered in Grand Rapids, and is in the Finance sector. The stock has seen a price change of -16.73% since the start of the year. The bank holding company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 4.24%. This compares to the Banks - Midwest industry's yield of 2.67% and the S&P 500's yield of 2.08%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 11.1% from last year. In the past five-year period, Independent Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 29.56%. 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. Independent Bank's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for IBCP for this fiscal year. The Zacks Consensus Estimate for 2020 is $2.04 per share, with earnings expected to increase 2% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that IBCP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).