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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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.
Headquartered in Jackson, Trustmark (TRMK) is a Finance stock that has seen a price change of 4.3% so far this year. Currently paying a dividend of $0.24 per share, the company has a dividend yield of 2.6%. In comparison, the Banks - Southeast industry's yield is 2.44%, while the S&P 500's yield is 1.47%.
Looking at dividend growth, the company's current annualized dividend of $0.96 is up 4.3% from last year. Over the last 5 years, Trustmark has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.46%. 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. Trustmark's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, TRMK expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.70 per share, representing a year-over-year earnings growth rate of 21.71%.
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.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TRMK 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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Trustmark Corporation (TRMK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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