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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 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.
Rocky Brands in Focus
Rocky Brands (RCKY) is headquartered in Nelsonville, and is in the Consumer Discretionary sector. The stock has seen a price change of -30.88% since the start of the year. Currently paying a dividend of $0.16 per share, the company has a dividend yield of 2.25%. In comparison, the Shoes and Retail Apparel industry's yield is 1.42%, while the S&P 500's yield is 1.65%.
In terms of dividend growth, the company's current annualized dividend of $0.62 is up 5.1% from last year. Rocky Brands has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.80%. 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. Rocky Brands's current payout ratio is 14%, meaning it paid out 14% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, RCKY expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $5.50 per share, which represents a year-over-year growth rate of 25.28%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that RCKY 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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Rocky Brands, Inc. (RCKY) : Free Stock Analysis Report
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