Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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.
Chemung Financial in Focus
Headquartered in Elmira, Chemung Financial (CHMG) is a Finance stock that has seen a price change of -3.01% so far this year. The financial holding company is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 2.75% compared to the Banks - Southeast industry's yield of 2.16% and the S&P 500's yield of 1.65%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.24 is up 4.2% from last year. Chemung Financial has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 4.05%. 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. Chemung Financial's current payout ratio is 21%. This means it paid out 21% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CHMG expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $5.91 per share, which represents a year-over-year growth rate of 4.79%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. 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 CHMG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Chemung Financial Corp (CHMG) : Free Stock Analysis Report
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