This is Why The First of Long Island (FLIC) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 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 -1.25% since the start of the year. The holding company for The First National Bank of Long Island is paying out a dividend of $0.2 per share at the moment, with a dividend yield of 3.75% compared to the Banks - Northeast industry's yield of 2.24% and the S&P 500's yield of 1.43%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 3.9% 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%. 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. Right now, The First of Long Island's payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.
FLIC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $1.94 per share, with earnings expected to increase 7.18% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that FLIC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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