Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Community Trust Bancorp in Focus
Community Trust Bancorp (CTBI) is headquartered in Pikeville, and is in the Finance sector. The stock has seen a price change of 1.92% since the start of the year. The bank holding company for Community Trust Bank is paying out a dividend of $0.36 per share at the moment, with a dividend yield of 3.57% compared to the Banks - Southeast industry's yield of 1.77% and the S&P 500's yield of 1.97%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.44 is up 4.3% from last year. In the past five-year period, Community Trust Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.14%. 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. Right now, Community Trust Bancorp's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.
CTBI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.50 per share, with earnings expected to increase 4.48% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CTBI 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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Community Trust Bancorp, Inc. (CTBI) : Free Stock Analysis Report
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