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.
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.
Camden National in Focus
Camden National (CAC) is headquartered in Camden, and is in the Finance sector. The stock has seen a price change of 22.6% since the start of the year. The bank is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.72%. This compares to the Banks - Northeast industry's yield of 1.67% and the S&P 500's yield of 1.94%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 9.1% from last year. Camden National has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 10.12%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Camden National's payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CAC for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.55 per share, representing a year-over-year earnings growth rate of 4.72%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. With that in mind, CAC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Camden National Corporation (CAC) : Free Stock Analysis Report
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