Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Headquartered in Tupelo, Cadence (CADE) is a Finance stock that has seen a price change of 2.61% so far this year. The bank is currently shelling out a dividend of $0.28 per share, with a dividend yield of 3.11%. This compares to the Banks - Southeast industry's yield of 2.38% and the S&P 500's yield of 1.5%.
Looking at dividend growth, the company's current annualized dividend of $1.10 is up 10% from last year. Over the last 5 years, Cadence has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.47%. 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. Cadence's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
CADE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $2.99 per share, representing a year-over-year earnings growth rate of 9.12%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. That said, they can take comfort from the fact that CADE is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Cadence Bank (CADE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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