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.
Orrstown Financial Services (ORRF) is headquartered in Harrisburg, and is in the Finance sector. The stock has seen a price change of -12.16% since the start of the year. The holding company for Orrstown Bank is paying out a dividend of $0.27 per share at the moment, with a dividend yield of 3.36% compared to the Banks - Northeast industry's yield of 2.69% and the S&P 500's yield of 1.51%.
Looking at dividend growth, the company's current annualized dividend of $1.08 is up 25.6% from last year. Over the last 5 years, Orrstown Financial Services has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.49%. 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. Orrstown's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.
ORRF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $4.17 per share, with earnings expected to increase 10.90% 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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ORRF 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Orrstown Financial Services Inc (ORRF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
