Why Heartland Financial (HTLF) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Heartland Financial in Focus
Headquartered in Denver, Heartland Financial (HTLF) is a Finance stock that has seen a price change of 2.36% so far this year. The multibank holding company is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.51%. This compares to the Banks - Midwest industry's yield of 3.04% and the S&P 500's yield of 1.69%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 10.1% from last year. Over the last 5 years, Heartland Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 18.91%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Heartland Financial's current payout ratio is 22%, meaning it paid out 22% of its trailing 12-month EPS as dividend.
HTLF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $5.41 per share, with earnings expected to increase 11.32% 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. But, not every company offers 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. That said, they can take comfort from the fact that HTLF 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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Heartland Financial USA, Inc. (HTLF) : Free Stock Analysis Report
