Bank OZK (OZK) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Bank OZK in Focus
Based in Little Rock, Bank OZK (OZK) is in the Finance sector, and so far this year, shares have seen a price change of -12.22%. The bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 3.48% compared to the Banks - Northeast industry's yield of 3.12% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.52 is up 7% from last year. In the past five-year period, Bank OZK has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.36%. 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. Bank OZK's current payout ratio is 25%. This means it paid out 25% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, OZK expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $5.93 per share, which represents a year-over-year growth rate of 1.02%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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, OZK 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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Bank OZK (OZK) : Free Stock Analysis Report
