Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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.
Hancock Whitney in Focus
Based in Gulfport, Hancock Whitney (HWC) is in the Finance sector, and so far this year, shares have seen a price change of 12.96%. The holding company of Whitney Bank and Hancock Bank is currently shelling out a dividend of $0.27 per share, with a dividend yield of 2.76%. This compares to the Banks - Southeast industry's yield of 1.78% and the S&P 500's yield of 1.97%.
In terms of dividend growth, the company's current annualized dividend of $1.08 is up 5.9% from last year. Hancock Whitney has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 1.82%. 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, Hancock Whitney's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HWC for this fiscal year. The Zacks Consensus Estimate for 2019 is $4.06 per share, representing a year-over-year earnings growth rate of 1.75%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HWC 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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Hancock Whitney Corporation (HWC) : Free Stock Analysis Report
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