All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Cambridge in Focus
Headquartered in Cambridge, Cambridge is a Finance stock that has seen a price change of -14.85% so far this year. The bank is paying out a dividend of $0.64 per share at the moment, with a dividend yield of 3.21% compared to the Banks - Northeast industry's yield of 2.64% and the S&P 500's yield of 1.8%.
Looking at dividend growth, the company's current annualized dividend of $2.56 is up 7.6% from last year. Over the last 5 years, Cambridge has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.93%. 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. Cambridge's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CATC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.97 per share, with earnings expected to increase 2.05% from the year ago period.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CATC 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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Cambridge (CATC) 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. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Cambridge in Focus
Headquartered in Cambridge, Cambridge is a Finance stock that has seen a price change of -14.85% so far this year. The bank is paying out a dividend of $0.64 per share at the moment, with a dividend yield of 3.21% compared to the Banks - Northeast industry's yield of 2.64% and the S&P 500's yield of 1.8%.
Looking at dividend growth, the company's current annualized dividend of $2.56 is up 7.6% from last year. Over the last 5 years, Cambridge has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.93%. 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. Cambridge's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CATC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $7.97 per share, with earnings expected to increase 2.05% from the year ago period.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CATC 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).