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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Horizon National in Focus
First Horizon National (FHN) is headquartered in Memphis, and is in the Finance sector. The stock has seen a price change of 21.05% since the start of the year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.52%. In comparison, the Banks - Southeast industry's yield is 1.92%, while the S&P 500's yield is 1.91%.
Looking at dividend growth, the company's current annualized dividend of $0.56 is up 16.7% from last year. Over the last 5 years, First Horizon National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 24.91%. 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. First Horizon's current payout ratio is 38%. This means it paid out 38% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FHN for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.59 per share, which represents a year-over-year growth rate of 12.77%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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, FHN 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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First Horizon National Corporation (FHN) : Free Stock Analysis Report
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