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Why First Horizon National (FHN) is a Top Dividend Stock for Your Portfolio
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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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
First Horizon National in Focus
Based in Memphis, First Horizon National (FHN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 21.2%. The bank holding company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 3.51% compared to the Banks - Southeast industry's yield of 1.82% and the S&P 500's yield of 1.87%.
Looking at dividend growth, the company's current annualized dividend of $0.56 is up 16.7% from last year. In the past five-year period, First Horizon National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 25.06%. 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. First Horizon's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
FHN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.57 per share, representing a year-over-year earnings growth rate of 11.35%.
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 have to be mindful 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 FHN is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why First Horizon National (FHN) 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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
First Horizon National in Focus
Based in Memphis, First Horizon National (FHN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 21.2%. The bank holding company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 3.51% compared to the Banks - Southeast industry's yield of 1.82% and the S&P 500's yield of 1.87%.
Looking at dividend growth, the company's current annualized dividend of $0.56 is up 16.7% from last year. In the past five-year period, First Horizon National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 25.06%. 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. First Horizon's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
FHN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.57 per share, representing a year-over-year earnings growth rate of 11.35%.
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 have to be mindful 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 FHN is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).