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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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
The First of Long Island in Focus
The First of Long Island (FLIC) is headquartered in Glen Head, and is in the Finance sector. The stock has seen a price change of 20.9% since the start of the year. The holding company for The First National Bank of Long Island is currently shelling out a dividend of $0.19 per share, with a dividend yield of 3.52%. This compares to the Banks - Northeast industry's yield of 2.02% and the S&P 500's yield of 1.35%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.76 is up 4.1% from last year. In the past five-year period, The First of Long Island has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.28%. 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, The First of Long Island's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FLIC expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.85 per share, which represents a year-over-year growth rate of 2.78%.
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, FLIC 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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The First of Long Island Corporation (FLIC) : Free Stock Analysis Report
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