Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Glacier Bancorp in Focus
Based in Kalispell, Glacier Bancorp (GBCI) is in the Finance sector, and so far this year, shares have seen a price change of 3.05%. The bank holding company is currently shelling out a dividend of $0.26 per share, with a dividend yield of 2.55%. This compares to the Banks - West industry's yield of 1.92% and the S&P 500's yield of 1.97%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.04 is up 3% from last year. Over the last 5 years, Glacier Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.10%. 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. Glacier Bancorp's current payout ratio is 46%. This means it paid out 46% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GBCI expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $2.42 per share, representing a year-over-year earnings growth rate of 11.52%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, GBCI 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Glacier Bancorp, Inc. (GBCI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research