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.
Based in Addison, Guaranty Bancshares Inc. (GNTY) is in the Finance sector, and so far this year, shares have seen a price change of 28.96%. Currently paying a dividend of $0.25 per share, the company has a dividend yield of 2.24%. In comparison, the Banks - Southwest industry's yield is 1.26%, while the S&P 500's yield is 1.46%.
Looking at dividend growth, the company's current annualized dividend of $1.00 is up 4.2% from last year. Over the last 5 years, Guaranty Bancshares Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.50%. 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. Guaranty Bancshares's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GNTY for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.30 per share, with earnings expected to increase 20.44% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 its 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, GNTY is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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Guaranty Bancshares Inc. (GNTY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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