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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
State Bank Financial in Focus
State Bank Financial (STBZ) is headquartered in Atlanta, and is in the Finance sector. The stock has seen a price change of -8.14% since the start of the year. Currently paying a dividend of $0.2 per share, the company has a dividend yield of 2.92%. In comparison, the Banks - Southeast industry's yield is 1.39%, while the S&P 500's yield is 1.9%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.80 is up 42.9% from last year. In the past five-year period, State Bank Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 52.89%. 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. State Bank Financial's current payout ratio is 45%. This means it paid out 45% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, STBZ expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $2.19 per share, with earnings expected to increase 50% 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. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious 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 STBZ is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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State Bank Financial Corporation. (STBZ) : Free Stock Analysis Report
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