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Why Salisbury Bancorp (SAL) 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.

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Salisbury Bancorp in Focus

Salisbury Bancorp (SAL) is headquartered in Lakeville, and is in the Finance sector. The stock has seen a price change of 24.79% since the start of the year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.58%. In comparison, the Banks - Northeast industry's yield is 1.94%, while the S&P 500's yield is 1.29%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 3.4% from last year. Salisbury Bancorp has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 0.79%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Salisbury Bancorp's current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, SAL expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $5.45 per share, with earnings expected to increase 29.76% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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. With that in mind, SAL presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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