Central Valley Community Bancorp (CVCY) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Central Valley Community Bancorp in Focus
Based in Fresno, Central Valley Community Bancorp (CVCY) is in the Finance sector, and so far this year, shares have seen a price change of -13.34%. The holding company for Central Valley Community Bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.67%. This compares to the Banks - West industry's yield of 2.71% and the S&P 500's yield of 1.84%.
In terms of dividend growth, the company's current annualized dividend of $0.48 is up 2.1% from last year. Over the last 5 years, Central Valley Community Bancorp has increased its dividend 3 times on a year-over-year basis for an average annual increase of 12.95%. 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. Central Valley Community Bancorp's current payout ratio is 22%. This means it paid out 22% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CVCY expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $2.32 per share, which represents a year-over-year growth rate of 0.43%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. With that in mind, CVCY presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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