This is Why Capital City Bank (CCBG) is a Great Dividend Stock
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 21.29% since the start of the year. The bank holding company is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 2% compared to the Banks - Southeast industry's yield of 2.15% and the S&P 500's yield of 1.68%.
Looking at 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 22.25%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Capital City Bank's current payout ratio is 32%, meaning it paid out 32% 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 $2.42 per share, representing a year-over-year earnings growth rate of 22.22%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CCBG 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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