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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
BankFinancial in Focus
Headquartered in Burr Ridge, BankFinancial (BFIN) is a Finance stock that has seen a price change of -4.08% so far this year. The bank holding company is currently shelling out a dividend of $0.1 per share, with a dividend yield of 2.79%. This compares to the Financial - Savings and Loan industry's yield of 2.28% and the S&P 500's yield of 1.99%.
Looking at dividend growth, the company's current annualized dividend of $0.40 is up 8.1% from last year. Over the last 5 years, BankFinancial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 43.42%. 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. BankFinancial's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BFIN expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $0.98 per share, with earnings expected to increase 13.95% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 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 BFIN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BankFinancial Corporation (BFIN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research