Arrow Financial (AROW) is a Top Dividend Stock Right Now: Should You Buy?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 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.
Arrow Financial in Focus
Based in Glens Falls, Arrow Financial (AROW) is in the Finance sector, and so far this year, shares have seen a price change of -3.42%. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 3.3%. In comparison, the Banks - Northeast industry's yield is 2.62%, while the S&P 500's yield is 1.63%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.08 is up 2.3% from last year. Over the last 5 years, Arrow Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.22%. 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. Arrow Financial's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AROW expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $3.40 per share, which represents a year-over-year growth rate of 15.25%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AROW 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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Arrow Financial Corporation (AROW) : Free Stock Analysis Report
