Capital City Bank (CCBG) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Capital City Bank in Focus
Headquartered in Tallahassee, Capital City Bank (CCBG) is a Finance stock that has seen a price change of 20.08% so far this year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 2.02%. This compares to the Banks - Southeast industry's yield of 2.19% and the S&P 500's yield of 1.71%.
In terms of dividend growth, the company's current annualized dividend of $0.64 is up 3.2% from last year. In the past five-year period, Capital City Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 22.25%. 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. Right now, Capital City Bank's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
CCBG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.40 per share, with earnings expected to increase 21.21% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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 CCBG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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