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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. However, 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Prosperity Bancshares in Focus
Prosperity Bancshares (PB - Free Report) is headquartered in Houston, and is in the Finance sector. The stock has seen a price change of -6.38% since the start of the year. The financial holding company is paying out a dividend of $0.58 per share at the moment, with a dividend yield of 3.29% compared to the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.32 is up 2.7% from last year. In the past five-year period, Prosperity Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.99%. 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, Prosperity Bancshares's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PB for this fiscal year. The Zacks Consensus Estimate for 2025 is $5.80 per share, with earnings expected to increase 13.50% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PB 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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Are You Looking for a High-Growth Dividend Stock?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Prosperity Bancshares in Focus
Prosperity Bancshares (PB - Free Report) is headquartered in Houston, and is in the Finance sector. The stock has seen a price change of -6.38% since the start of the year. The financial holding company is paying out a dividend of $0.58 per share at the moment, with a dividend yield of 3.29% compared to the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.32 is up 2.7% from last year. In the past five-year period, Prosperity Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.99%. 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, Prosperity Bancshares's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PB for this fiscal year. The Zacks Consensus Estimate for 2025 is $5.80 per share, with earnings expected to increase 13.50% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PB 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).