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 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.
BB&T in Focus
Headquartered in Winston-Salem, BB&T is a Finance stock that has seen a price change of 12.26% so far this year. The regional banking company is paying out a dividend of $0.41 per share at the moment, with a dividend yield of 3.33% compared to the Banks - Major Regional industry's yield of 2.86% and the S&P 500's yield of 1.91%.
In terms of dividend growth, the company's current annualized dividend of $1.62 is up 3.8% from last year. BB&T has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.32%. 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. BB&T's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BBT expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.28 per share, which represents a year-over-year growth rate of 9.46%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, BBT 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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Why BB&T (BBT) 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.
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.
BB&T in Focus
Headquartered in Winston-Salem, BB&T is a Finance stock that has seen a price change of 12.26% so far this year. The regional banking company is paying out a dividend of $0.41 per share at the moment, with a dividend yield of 3.33% compared to the Banks - Major Regional industry's yield of 2.86% and the S&P 500's yield of 1.91%.
In terms of dividend growth, the company's current annualized dividend of $1.62 is up 3.8% from last year. BB&T has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.32%. 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. BB&T's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BBT expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.28 per share, which represents a year-over-year growth rate of 9.46%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, BBT 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).