Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
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 10.63% since the start of the year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.57%. In comparison, the Banks - Northeast industry's yield is 1.58%, while the S&P 500's yield is 1.77%.
In terms of dividend growth, the company's current annualized dividend of $1.20 is up 30.4% from last year. In the past five-year period, Camden National has increased its dividend 3 times on a year-over-year basis for an average annual increase of 7.35%. 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, Camden National's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CAC expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $3.30 per share, with earnings expected to increase 20.88% 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.
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. That said, they can take comfort from the fact that CAC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Camden National Corporation (CAC) : Free Stock Analysis Report
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