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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Independent Bank Corp. In Focus
Headquartered in Hanover, Independent Bank Corp. (INDB) is a Finance stock that has seen a price change of 7.83% so far this year. The holding company for Rockland Trust is currently shelling out a dividend of $0.48 per share, with a dividend yield of 2.44%. This compares to the Banks - Northeast industry's yield of 1.94% and the S&P 500's yield of 1.3%.
Looking at dividend growth, the company's current annualized dividend of $1.92 is up 4.3% from last year. Over the last 5 years, Independent Bank Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.55%. 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. Independent Bank Corp.'s current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for INDB for this fiscal year. The Zacks Consensus Estimate for 2021 is $4.36 per share, with earnings expected to increase 19.13% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. 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, INDB 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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Independent Bank Corp. (INDB) : Free Stock Analysis Report
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