Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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.
Camden National in Focus
Camden National (CAC) is headquartered in Camden, and is in the Finance sector. The stock has seen a price change of 11.29% since the start of the year. The bank is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3% compared to the Banks - Northeast industry's yield of 1.7% and the S&P 500's yield of 1.98%.
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%. 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. Camden National's current payout ratio is 37%. This means it paid out 37% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CAC for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.50 per share, with earnings expected to increase 3.24% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, CAC 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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Camden National Corporation (CAC) : Free Stock Analysis Report
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