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Why First Financial Bankshares (FFIN) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
First Financial Bankshares in Focus
Based in Abilene, First Financial Bankshares (FFIN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 1.39%. The commercial banker operating mostly in Texas is paying out a dividend of $0.18 per share at the moment, with a dividend yield of 2.34% compared to the Banks - Southwest industry's yield of 0.57% and the S&P 500's yield of 1.57%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 1.4% from last year. In the past five-year period, First Financial Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.78%. 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. Right now, First Financial's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
FFIN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.45 per share, with earnings expected to increase 4.32% from the year ago period.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FFIN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Why First Financial Bankshares (FFIN) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
First Financial Bankshares in Focus
Based in Abilene, First Financial Bankshares (FFIN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 1.39%. The commercial banker operating mostly in Texas is paying out a dividend of $0.18 per share at the moment, with a dividend yield of 2.34% compared to the Banks - Southwest industry's yield of 0.57% and the S&P 500's yield of 1.57%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 1.4% from last year. In the past five-year period, First Financial Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.78%. 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. Right now, First Financial's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
FFIN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.45 per share, with earnings expected to increase 4.32% from the year ago period.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, FFIN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).