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Cathay General (CATY) is a Top Dividend Stock Right Now: Should You Buy?
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of 5.16% so far this year. The holding company for Cathay Bank is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 3.52% compared to the Banks - West industry's yield of 2.05% and the S&P 500's yield of 1.93%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.24 is up 20.4% from last year. In the past five-year period, Cathay General has increased its dividend 5 times on a year-over-year basis for an average annual increase of 31.61%. 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, Cathay's payout ratio is 36%, which means it paid out 36% of its trailing 12-month EPS as dividend.
CATY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.48 per share, which represents a year-over-year growth rate of 4.19%.
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. 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. 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 CATY 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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Cathay General (CATY) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Cathay General in Focus
Headquartered in Los Angeles, Cathay General (CATY - Free Report) is a Finance stock that has seen a price change of 5.16% so far this year. The holding company for Cathay Bank is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 3.52% compared to the Banks - West industry's yield of 2.05% and the S&P 500's yield of 1.93%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.24 is up 20.4% from last year. In the past five-year period, Cathay General has increased its dividend 5 times on a year-over-year basis for an average annual increase of 31.61%. 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, Cathay's payout ratio is 36%, which means it paid out 36% of its trailing 12-month EPS as dividend.
CATY is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.48 per share, which represents a year-over-year growth rate of 4.19%.
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. 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. 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 CATY is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).