All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Colony Bankcorp in Focus
Headquartered in Fitzgerald, Colony Bankcorp (CBAN) is a Finance stock that has seen a price change of 2.66% so far this year. The bank holding company is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.78% compared to the Banks - Southeast industry's yield of 2.4% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $0.46 is up 2.2% from last year. Over the last 5 years, Colony Bankcorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.99%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Colony Bankcorp's payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CBAN for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.71 per share, which represents a year-over-year growth rate of 17.12%.
Bottom Line
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.
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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CBAN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Colony Bankcorp, Inc. (CBAN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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