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Why Fifth Third Bancorp (FITB) 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. 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 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.
Fifth Third Bancorp in Focus
Headquartered in Cincinnati, Fifth Third Bancorp (FITB - Free Report) is a Finance stock that has seen a price change of 19.63% so far this year. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - Major Regional industry's yield is 3.27%, while the S&P 500's yield is 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.40 is up 2.9% from last year. Over the last 5 years, Fifth Third Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.55%. 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. Fifth Third Bancorp's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.
FITB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $3.30 per share, representing a year-over-year earnings growth rate of 2.48%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that FITB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Fifth Third Bancorp (FITB) 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. 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 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.
Fifth Third Bancorp in Focus
Headquartered in Cincinnati, Fifth Third Bancorp (FITB - Free Report) is a Finance stock that has seen a price change of 19.63% so far this year. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - Major Regional industry's yield is 3.27%, while the S&P 500's yield is 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.40 is up 2.9% from last year. Over the last 5 years, Fifth Third Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 8.55%. 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. Fifth Third Bancorp's current payout ratio is 40%. This means it paid out 40% of its trailing 12-month EPS as dividend.
FITB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $3.30 per share, representing a year-over-year earnings growth rate of 2.48%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that FITB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).