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Why Essa Bancorp (ESSA) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essa Bancorp in Focus
Headquartered in Stroudsburg, Essa Bancorp (ESSA - Free Report) is a Finance stock that has seen a price change of 4.73% so far this year. The bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.64%. This compares to the Financial - Savings and Loan industry's yield of 2.4% and the S&P 500's yield of 1.4%.
In terms of dividend growth, the company's current annualized dividend of $0.48 is up 2.1% from last year. Essa Bancorp has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.68%. 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. Right now, Essa Bancorp's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ESSA expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.81 per share, which represents a year-over-year growth rate of 9.70%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. 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 ESSA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Essa Bancorp (ESSA) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essa Bancorp in Focus
Headquartered in Stroudsburg, Essa Bancorp (ESSA - Free Report) is a Finance stock that has seen a price change of 4.73% so far this year. The bank is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.64%. This compares to the Financial - Savings and Loan industry's yield of 2.4% and the S&P 500's yield of 1.4%.
In terms of dividend growth, the company's current annualized dividend of $0.48 is up 2.1% from last year. Essa Bancorp has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.68%. 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. Right now, Essa Bancorp's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ESSA expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.81 per share, which represents a year-over-year growth rate of 9.70%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. 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 ESSA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).