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 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.
Lakeland Financial in Focus
Based in Warsaw, Lakeland Financial (LKFN) is in the Finance sector, and so far this year, shares have seen a price change of 18.9%. The holding company for Lake City Bank is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.51%. This compares to the Banks - Midwest industry's yield of 2.43% and the S&P 500's yield of 1.86%.
Looking at dividend growth, the company's current annualized dividend of $1.20 is up 9.1% from last year. In the past five-year period, Lakeland Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.06%. 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. Lakeland Financial's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, LKFN expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $3.30 per share, which represents a year-over-year growth rate of 5.43%.
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.
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, LKFN 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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Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report
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