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Why German American Bancorp (GABC) 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. But 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 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.
German American Bancorp in Focus
German American Bancorp (GABC - Free Report) is headquartered in Jasper, and is in the Finance sector. The stock has seen a price change of -4.08% since the start of the year. Currently paying a dividend of $0.23 per share, the company has a dividend yield of 2.46%. In comparison, the Banks - Midwest industry's yield is 2.9%, while the S&P 500's yield is 1.68%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 9.5% from last year. German American Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.27%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. German American Bancorp's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GABC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $3.24 per share, which represents a year-over-year growth rate of 2.21%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. 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 GABC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why German American Bancorp (GABC) 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. But 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 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.
German American Bancorp in Focus
German American Bancorp (GABC - Free Report) is headquartered in Jasper, and is in the Finance sector. The stock has seen a price change of -4.08% since the start of the year. Currently paying a dividend of $0.23 per share, the company has a dividend yield of 2.46%. In comparison, the Banks - Midwest industry's yield is 2.9%, while the S&P 500's yield is 1.68%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 9.5% from last year. German American Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.27%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. German American Bancorp's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GABC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $3.24 per share, which represents a year-over-year growth rate of 2.21%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. 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 GABC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).