All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Camden National in Focus
Headquartered in Camden, Camden National (CAC) is a Finance stock that has seen a price change of 22.74% so far this year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.72%. In comparison, the Banks - Northeast industry's yield is 1.83%, while the S&P 500's yield is 1.87%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 9.1% from last year. Camden National has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 11.58%. 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. Camden National's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CAC for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.75 per share, with earnings expected to increase 10.62% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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, CAC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Camden National Corporation (CAC) : Free Stock Analysis Report
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