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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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 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.
Horizon Bancorp in Focus
Based in Michigan City, Horizon Bancorp (HBNC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -1.15%. Currently paying a dividend of $0.15 per share, the company has a dividend yield of 2.91%. In comparison, the Banks - Northeast industry's yield is 2.13%, while the S&P 500's yield is 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 13.2% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 13.74%. 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. Horizon Bancorp's current payout ratio is 30%, meaning it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBNC for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.08 per share, representing a year-over-year earnings growth rate of 4%.
Bottom Line
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HBNC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Horizon Bancorp (HBNC) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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 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.
Horizon Bancorp in Focus
Based in Michigan City, Horizon Bancorp (HBNC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -1.15%. Currently paying a dividend of $0.15 per share, the company has a dividend yield of 2.91%. In comparison, the Banks - Northeast industry's yield is 2.13%, while the S&P 500's yield is 1.42%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 13.2% from last year. Horizon Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 13.74%. 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. Horizon Bancorp's current payout ratio is 30%, meaning it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBNC for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.08 per share, representing a year-over-year earnings growth rate of 4%.
Bottom Line
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HBNC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).