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Why First Bancorp (FBP) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Bancorp in Focus
Headquartered in San Juan, First Bancorp (FBP - Free Report) is a Finance stock that has seen a price change of 6.14% so far this year. The holding company for FirstBank Puerto Rico is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 3.67% compared to the Banks - Southeast industry's yield of 2.79% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 14.3% from last year. In the past five-year period, First Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 41.87%. 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 Bancorp's payout ratio is 36%, which means it paid out 36% of its trailing 12-month EPS as dividend.
FBP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.77 per share, which represents a year-over-year growth rate of 3.51%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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 FBP 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 First Bancorp (FBP) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
First Bancorp in Focus
Headquartered in San Juan, First Bancorp (FBP - Free Report) is a Finance stock that has seen a price change of 6.14% so far this year. The holding company for FirstBank Puerto Rico is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 3.67% compared to the Banks - Southeast industry's yield of 2.79% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 14.3% from last year. In the past five-year period, First Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 41.87%. 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 Bancorp's payout ratio is 36%, which means it paid out 36% of its trailing 12-month EPS as dividend.
FBP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $1.77 per share, which represents a year-over-year growth rate of 3.51%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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 FBP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).