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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.
East West Bancorp in Focus
East West Bancorp (EWBC - Free Report) is headquartered in Pasadena, and is in the Finance sector. The stock has seen a price change of 1.35% since the start of the year. The bank holding company is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 2.87% compared to the Banks - West industry's yield of 2.55% and the S&P 500's yield of 1.7%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.92 is up 20% from last year. East West Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.62%. 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. East West Bancorp's current payout ratio is 20%. This means it paid out 20% of its trailing 12-month EPS as dividend.
EWBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $9.12 per share, which represents a year-over-year growth rate of 15.15%.
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.
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. With that in mind, EWBC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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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.
East West Bancorp in Focus
East West Bancorp (EWBC - Free Report) is headquartered in Pasadena, and is in the Finance sector. The stock has seen a price change of 1.35% since the start of the year. The bank holding company is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 2.87% compared to the Banks - West industry's yield of 2.55% and the S&P 500's yield of 1.7%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.92 is up 20% from last year. East West Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.62%. 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. East West Bancorp's current payout ratio is 20%. This means it paid out 20% of its trailing 12-month EPS as dividend.
EWBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $9.12 per share, which represents a year-over-year growth rate of 15.15%.
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.
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. With that in mind, EWBC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).