Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Lakeland Financial in Focus
Lakeland Financial (LKFN) is headquartered in Warsaw, and is in the Finance sector. The stock has seen a price change of -0.15% since the start of the year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2%. In comparison, the Banks - Midwest industry's yield is 2.79%, while the S&P 500's yield is 1.56%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 17.6% from last year. Over the last 5 years, Lakeland Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 15.68%. 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. Lakeland Financial's current payout ratio is 42%. This means it paid out 42% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LKFN for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.01 per share, with earnings expected to increase 7.22% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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, LKFN 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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Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report
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