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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Lakeland Bancorp in Focus
Headquartered in Oak Ridge, Lakeland Bancorp (LBAI) is a Finance stock that has seen a price change of 9.45% so far this year. Currently paying a dividend of $0.13 per share, the company has a dividend yield of 3.08%. In comparison, the Banks - Northeast industry's yield is 1.81%, while the S&P 500's yield is 1.97%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.50 is up 12.4% from last year. Over the last 5 years, Lakeland Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.60%. 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. Lakeland Bancorp's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LBAI for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.43 per share, with earnings expected to increase 6.72% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 LBAI 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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Lakeland Bancorp, Inc. (LBAI) : Free Stock Analysis Report
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