OceanFirst Financial (OCFC) is a Top Dividend Stock Right Now: Should You Buy?
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 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.
OceanFirst Financial in Focus
Headquartered in Red Bank, OceanFirst Financial (OCFC) is a Finance stock that has seen a price change of 15.53% so far this year. The holding company for OceanFirst Bank is currently shelling out a dividend of $0.2 per share, with a dividend yield of 3.26%. This compares to the Financial - Savings and Loan industry's yield of 2.78% and the S&P 500's yield of 1.56%.
In terms of dividend growth, the company's current annualized dividend of $0.80 is up 8.1% from last year. OceanFirst Financial has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 3.75%. 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. OceanFirst's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for OCFC for this fiscal year. The Zacks Consensus Estimate for 2023 is $2.70 per share, representing a year-over-year earnings growth rate of 15.38%.
Bottom Line
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. That said, they can take comfort from the fact that OCFC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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OceanFirst Financial Corp. (OCFC) : Free Stock Analysis Report
