Summit Financial (SMMF) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
Summit Financial in Focus
Summit Financial (SMMF) is headquartered in Moorefield, and is in the Finance sector. The stock has seen a price change of 9.14% since the start of the year. The financial holding company is currently shelling out a dividend of $0.18 per share, with a dividend yield of 2.4%. This compares to the Banks - Southeast industry's yield of 2.09% and the S&P 500's yield of 1.56%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 2.9% from last year. In the past five-year period, Summit Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 10.78%. 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. Summit Financial's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for SMMF for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.11 per share, with earnings expected to increase 18.44% from the year ago period.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 SMMF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Summit Financial Group, Inc. (SMMF) : Free Stock Analysis Report
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