AAll investors love to earn big returns from their portfolio, whether through stocks, bonds, ETFs, or other types of securities. However, when you are an income investor, your main goal is to generate 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 the distribution of a company’s profits paid to shareholders; it is often viewed by its dividend yield, a measure that measures a dividend as a percentage of the current stock price. Numerous academic studies show that dividends are a large part of long-term returns, and in many cases dividend contributions exceed one-third of total returns.
Focus on the unity of peoples
Bridgeport-based People’s United (PBCT) is in the finance industry, and so far this year the stocks have seen a 46.56% price change. The People’s United Bank holding company currently pays a dividend of $ 0.18 per share, with a dividend yield of 3.85%. This compares to the financial industry performance – Savings and Credit of 2.27% and the S&P 500 performance of 1.3%.
In terms of dividend growth, the company’s current annualized dividend of $ 0.73 is up 1.7% from a year ago. Over the past five years, People’s United has increased its dividend 5 times year over year for an average annual increase of 1.38%. Any future dividend growth will depend on both earnings growth and the payout ratio of the company; a payout ratio is the proportion of a company’s annual earnings per share that it pays out as a dividend. People’s United’s current payout rate is 55%. This means that he paid 55% of his 12-month EPS as a dividend.
PBCT also expects an increase in its profits during this fiscal year. Zacks’ consensus estimate for 2021 is $ 1.29 per share, which represents a year-over-year growth rate of 1.57%.
Whether it’s dramatically improving earnings from equity investments and reducing overall portfolio risk or offering tax benefits, investors love dividends for a variety of reasons. However, not all companies offer quarterly payment.
Large, established companies that have safer earnings are often considered the best dividend options, but it is quite rare to see high growth companies or tech start-ups offering a dividend to their shareholders. During times of rising interest rates, income investors should be aware that high yielding stocks tend to struggle. With that in mind, PBCT is a compelling investment opportunity. Not only is this a big dividend game, the stock currently sits at Zacks rank of 3 (Hold).
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