First Mid-Illinois Bancshares (FMBH) is a Top Dividend Stock Right Now: Should You Buy?
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.
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.
First Mid-Illinois Bancshares in Focus
Based in Mattoon, First Mid-Illinois Bancshares (FMBH) is in the Finance sector, and so far this year, shares have seen a price change of 21.57%. The bank holding company is currently shelling out a dividend of $0.2 per share, with a dividend yield of 2%. This compares to the Banks - Northeast industry's yield of 1.94% and the S&P 500's yield of 1.38%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.82 is up 1.2% from last year. First Mid-Illinois Bancshares has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 16.21%. 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. First Mid-Illinois's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FMBH for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.47 per share, which represents a year-over-year growth rate of 28.52%.
Bottom Line
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, FMBH 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 MidIllinois Bancshares, Inc. (FMBH) : Free Stock Analysis Report
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