All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Camden National in Focus
Headquartered in Camden, Camden National (CAC) is a Finance stock that has seen a price change of 27.52% so far this year. The bank is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.62%. This compares to the Banks - Northeast industry's yield of 1.89% and the S&P 500's yield of 1.91%.
Looking at dividend growth, the company's current annualized dividend of $1.20 is up 9.1% from last year. In the past five-year period, Camden National has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.02%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Camden National's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CAC for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.75 per share, with earnings expected to increase 10.62% from the year ago period.
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.
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. That said, they can take comfort from the fact that CAC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Camden National Corporation (CAC) : Free Stock Analysis Report
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