Why First Savings Financial (FSFG) is a Top Dividend Stock for Your Portfolio
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Savings Financial in Focus
Headquartered in Jeffersonville, First Savings Financial (FSFG) is a Finance stock that has seen a price change of -24.5% so far this year. The bank holding company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 3.71% compared to the Financial - Savings and Loan industry's yield of 3.71% and the S&P 500's yield of 1.7%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 1.8% from last year. Over the last 5 years, First Savings Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 31.80%. 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, First Savings Financial's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FSFG for this fiscal year. The Zacks Consensus Estimate for 2023 is $2.15 per share, with earnings expected to increase 16.22% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FSFG 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).
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First Savings Financial Group, Inc. (FSFG) : Free Stock Analysis Report
