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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Colony Bankcorp in Focus
Colony Bankcorp (CBAN) is headquartered in Fitzgerald, and is in the Finance sector. The stock has seen a price change of -15.45% since the start of the year. The bank holding company is currently shelling out a dividend of $0.11 per share, with a dividend yield of 4.1%. This compares to the Banks - Southeast industry's yield of 2.8% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.44 is up 2.3% from last year. In the past five-year period, Colony Bankcorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 14.86%. 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. Right now, Colony Bankcorp's payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.
CBAN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $1.31 per share, with earnings expected to increase 2.34% 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. It's important to keep in mind that not all companies provide 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, CBAN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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