U.S. Markets close in 1 hr 6 mins
  • S&P 500

    4,582.92
    +15.92 (+0.35%)
     
  • Dow 30

    34,494.21
    +10.49 (+0.03%)
     
  • Nasdaq

    15,517.38
    -20.31 (-0.13%)
     
  • Russell 2000

    2,192.69
    -6.22 (-0.28%)
     
  • Crude Oil

    65.91
    -0.27 (-0.41%)
     
  • Gold

    1,782.20
    +5.70 (+0.32%)
     
  • Silver

    22.28
    -0.53 (-2.32%)
     
  • EUR/USD

    1.1328
    -0.0012 (-0.1019%)
     
  • 10-Yr Bond

    1.4460
    +0.0030 (+0.21%)
     
  • Vix

    26.14
    -1.05 (-3.86%)
     
  • GBP/USD

    1.3280
    -0.0021 (-0.1594%)
     
  • USD/JPY

    112.8020
    -0.3780 (-0.3340%)
     
  • BTC-USD

    57,631.33
    +174.54 (+0.30%)
     
  • CMC Crypto 200

    1,472.22
    +3.14 (+0.21%)
     
  • FTSE 100

    7,168.68
    +109.23 (+1.55%)
     
  • Nikkei 225

    27,935.62
    +113.86 (+0.41%)
     

This is Why Investors Bancorp (ISBC) is a Great Dividend Stock

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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.

Investors Bancorp in Focus

Investors Bancorp (ISBC) is headquartered in Short Hills, and is in the Finance sector. The stock has seen a price change of 39.3% since the start of the year. The holding company for Investors Bank is currently shelling out a dividend of $0.14 per share, with a dividend yield of 3.81%. This compares to the Financial - Savings and Loan industry's yield of 2.35% and the S&P 500's yield of 1.35%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.56 is up 16.7% from last year. Over the last 5 years, Investors Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 16.15%. 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, Investors Bancorp's payout ratio is 52%, which means it paid out 52% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ISBC for this fiscal year. The Zacks Consensus Estimate for 2021 is $1.24 per share, with earnings expected to increase 31.91% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. With that in mind, ISBC 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
 
Investors Bancorp, Inc. (ISBC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.