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AAll investors love to earn big returns from their portfolio, whether through stocks, bonds, ETFs or other types of securities. But when you’re an income investor, your main goal is to generate consistent cash flow from each of your liquid investments.
Cash flow can come from interest on bonds, interest from other types of investments and, of course, dividends. A dividend is the coveted distribution of a company’s profits paid to shareholders, and investors often perceive it through its dividend yield, a measure that measures the dividend as a percentage of the current stock price. Numerous academic studies show that dividends are a significant part of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Salisbury Bancorp in brief
Salisbury Bancorp (SAL) is headquartered in Lakeville and is in the finance industry. The stock has seen a 24.79% price change 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 return of the Banks – Northeast industry is 1.94%, while that of the S&P 500 is 1.29%.
Looking at the company’s dividend growth, its current annualized dividend of $ 1.20 is up 3.4% from a year ago. Salisbury Bancorp has increased its dividend 1 time on an annual basis over the past 5 years for an average annual increase of 0.79%. Future dividend growth will depend on earnings growth as well as the 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 that it paid 23% of its 12-month EPS as a dividend.
Looking at this fiscal year, SAL expects solid earnings growth. Zacks’ consensus estimate for 2021 is $ 5.45 per share, with earnings expected to rise 29.76% from a year ago.
At the end of the line
Whether it’s dramatically improving profits from investing in stocks and reducing overall portfolio risk or offering tax benefits, investors love dividends for a variety of reasons. It’s important to keep in mind that not all companies offer quarterly payouts.
High-growth companies or tech start-ups, for example, rarely deliver a dividend to their shareholders, while larger, more established companies that make safer profits are often seen as the best dividend options. During times of rising interest rates, income investors should be aware that high yielding stocks tend to struggle. With this in mind, SAL presents a compelling investment opportunity; it is not only an attractive dividend game, but the title also enjoys a strong Zacks rank of # 2 (buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
