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Are You Looking for a High-Growth Dividend Stock? Cathay General (CATY) Could Be a Great Choice
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of -6.72% so far this year. Currently paying a dividend of $0.34 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - West industry's yield is 2.64%, while the S&P 500's yield is 1.52%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.36 is up 7.1% from last year. Cathay General has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 9.32%. 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. Cathay's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CATY expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.41 per share, representing a year-over-year earnings growth rate of 16.05%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that CATY 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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Are You Looking for a High-Growth Dividend Stock? Cathay General (CATY) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of -6.72% so far this year. Currently paying a dividend of $0.34 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - West industry's yield is 2.64%, while the S&P 500's yield is 1.52%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.36 is up 7.1% from last year. Cathay General has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 9.32%. 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. Cathay's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CATY expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.41 per share, representing a year-over-year earnings growth rate of 16.05%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that CATY is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).