Why Lakeland Financial (LKFN) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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.
Lakeland Financial in Focus
Lakeland Financial (LKFN) is headquartered in Warsaw, and is in the Finance sector. The stock has seen a price change of -4.45% since the start of the year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2.09%. In comparison, the Banks - Midwest industry's yield is 2.77%, while the S&P 500's yield is 1.83%.
Looking at dividend growth, the company's current annualized dividend of $1.60 is up 17.6% from last year. Lakeland Financial has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.68%. 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 Financial's current payout ratio is 42%. This means it paid out 42% of its trailing 12-month EPS as dividend.
LKFN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $4.01 per share, which represents a year-over-year growth rate of 7.22%.
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.
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. That said, they can take comfort from the fact that LKFN 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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