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Fifth Third Bancorp (FITB) Could Be a Great Choice
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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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Fifth Third Bancorp in Focus
Fifth Third Bancorp (FITB - Free Report) is headquartered in Cincinnati, and is in the Finance sector. The stock has seen a price change of 22.12% since the start of the year. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 3.32%. In comparison, the Banks - Major Regional industry's yield is 3.44%, while the S&P 500's yield is 1.55%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.40 is up 2.9% from last year. Fifth Third Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.55%. 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. Fifth Third Bancorp's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FITB for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.31 per share, which represents a year-over-year growth rate of 2.80%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FITB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Fifth Third Bancorp (FITB) Could Be a Great Choice
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Fifth Third Bancorp in Focus
Fifth Third Bancorp (FITB - Free Report) is headquartered in Cincinnati, and is in the Finance sector. The stock has seen a price change of 22.12% since the start of the year. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 3.32%. In comparison, the Banks - Major Regional industry's yield is 3.44%, while the S&P 500's yield is 1.55%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.40 is up 2.9% from last year. Fifth Third Bancorp has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.55%. 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. Fifth Third Bancorp's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FITB for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.31 per share, which represents a year-over-year growth rate of 2.80%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FITB is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).