- Oops!Something went wrong.Please try again later.
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Capital City Bank in Focus
Capital City Bank (CCBG) is headquartered in Tallahassee, and is in the Finance sector. The stock has seen a price change of -1.4% since the start of the year. The bank holding company is currently shelling out a dividend of $0.16 per share, with a dividend yield of 2.46%. This compares to the Banks - Southeast industry's yield of 2.11% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $0.64 is up 3.2% from last year. Capital City Bank has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 25.86%. 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. Right now, Capital City Bank's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
CCBG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.18 per share, which represents a year-over-year growth rate of 10.10%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CCBG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong 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
To read this article on Zacks.com click here.
Zacks Investment Research