All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.
Camden National in Focus
Headquartered in Camden, Camden National (CAC) is a Finance stock that has seen a price change of 20.82% so far this year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.76%. In comparison, the Banks - Northeast industry's yield is 1.7%, while the S&P 500's yield is 1.92%.
In terms of dividend growth, the company's current annualized dividend of $1.20 is up 9.1% from last year. Camden National has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 10.12%. 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. Camden National's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.
CAC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.55 per share, with earnings expected to increase 4.72% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CAC 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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Camden National Corporation (CAC) : Free Stock Analysis Report
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