Why Associated Banc-Corp (ASB) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Associated Banc-Corp in Focus
Headquartered in Green Bay, Associated Banc-Corp (ASB) is a Finance stock that has seen a price change of -2.38% so far this year. The bank holding company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 3.73%. This compares to the Banks - Midwest industry's yield of 2.95% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.84 is up 3.7% from last year. Associated Banc-Corp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 6.64%. 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. Associated Banc-Corp's current payout ratio is 37%. This means it paid out 37% of its trailing 12-month EPS as dividend.
ASB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $2.37 per share, with earnings expected to increase 1.28% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ASB 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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Associated Banc-Corp (ASB) : Free Stock Analysis Report
