Horizon Bancorp (HBNC) 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. 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.
Horizon Bancorp in Focus
Headquartered in Michigan City, Horizon Bancorp (HBNC) is a Finance stock that has seen a price change of -6.43% so far this year. Currently paying a dividend of $0.16 per share, the company has a dividend yield of 3.28%. In comparison, the Banks - Northeast industry's yield is 2.58%, while the S&P 500's yield is 1.79%.
Looking at dividend growth, the company's current annualized dividend of $0.64 is up 20.8% from last year. In the past five-year period, Horizon Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.58%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Horizon Bancorp's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBNC for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.31 per share, with earnings expected to increase 15.50% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that HBNC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Horizon Bancorp IN (HBNC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
