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Why FS Bancorp (FSBW) is a Top Dividend Stock for Your Portfolio
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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. 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 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.
FS Bancorp in Focus
FS Bancorp (FSBW - Free Report) is headquartered in Mountlake Terrace, and is in the Finance sector. The stock has seen a price change of -10.53% since the start of the year. Currently paying a dividend of $0.25 per share, the company has a dividend yield of 3.34%. In comparison, the Banks - West industry's yield is 3.05%, while the S&P 500's yield is 1.77%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 11.1% from last year. FS Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 31.26%. 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. FS Bancorp's current payout ratio is 22%, meaning it paid out 22% of its trailing 12-month EPS as dividend.
FSBW is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.78 per share, representing a year-over-year earnings growth rate of 29.19%.
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.
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. 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 FSBW is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why FS Bancorp (FSBW) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
FS Bancorp in Focus
FS Bancorp (FSBW - Free Report) is headquartered in Mountlake Terrace, and is in the Finance sector. The stock has seen a price change of -10.53% since the start of the year. Currently paying a dividend of $0.25 per share, the company has a dividend yield of 3.34%. In comparison, the Banks - West industry's yield is 3.05%, while the S&P 500's yield is 1.77%.
Looking at dividend growth, the company's current annualized dividend of $1 is up 11.1% from last year. FS Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 31.26%. 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. FS Bancorp's current payout ratio is 22%, meaning it paid out 22% of its trailing 12-month EPS as dividend.
FSBW is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.78 per share, representing a year-over-year earnings growth rate of 29.19%.
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.
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. 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 FSBW is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).