U.S. Markets closed
  • S&P 500

    3,825.33
    +39.95 (+1.06%)
     
  • Dow 30

    31,097.26
    +321.86 (+1.05%)
     
  • Nasdaq

    11,127.84
    +99.14 (+0.90%)
     
  • Russell 2000

    1,727.76
    +19.77 (+1.16%)
     
  • Crude Oil

    108.10
    -0.33 (-0.30%)
     
  • Gold

    1,806.70
    +5.20 (+0.29%)
     
  • Silver

    19.75
    +0.09 (+0.45%)
     
  • EUR/USD

    1.0457
    +0.0031 (+0.2928%)
     
  • 10-Yr Bond

    2.8890
    0.0000 (0.00%)
     
  • Vix

    26.70
    -2.01 (-7.00%)
     
  • GBP/USD

    1.2130
    +0.0027 (+0.2232%)
     
  • USD/JPY

    135.4460
    +0.2710 (+0.2005%)
     
  • BTC-USD

    19,454.88
    +366.37 (+1.92%)
     
  • CMC Crypto 200

    420.84
    +0.70 (+0.17%)
     
  • FTSE 100

    7,245.01
    +76.36 (+1.07%)
     
  • Nikkei 225

    26,153.81
    +218.19 (+0.84%)
     

Why Prosperity Bancshares (PB) is a Great Dividend Stock Right Now

  • Oops!
    Something went wrong.
    Please try again later.
·2 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. But 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 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.

Prosperity Bancshares in Focus

Based in Houston, Prosperity Bancshares (PB) is in the Finance sector, and so far this year, shares have seen a price change of -6%. The financial holding company is currently shelling out a dividend of $0.52 per share, with a dividend yield of 3.06%. This compares to the Banks - Southwest industry's yield of 1.45% and the S&P 500's yield of 1.76%.

Looking at dividend growth, the company's current annualized dividend of $2.08 is up 4.5% from last year. Over the last 5 years, Prosperity Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.08%. 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. Prosperity Bancshares's current payout ratio is 38%. This means it paid out 38% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for PB for this fiscal year. The Zacks Consensus Estimate for 2022 is $5.65 per share, representing a year-over-year earnings growth rate of 0.89%.

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. 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, PB 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
 
To read this article on Zacks.com click here.
 
Zacks Investment Research