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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Lexington, First Community (FCCO) is in the Finance sector, and so far this year, shares have seen a price change of 11.83%. The holding company for First Community Bank is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 2.38% compared to the Banks - Southeast industry's yield of 2.34% and the S&P 500's yield of 1.49%.
Looking at dividend growth, the company's current annualized dividend of $0.64 is up 10.3% from last year. Over the last 5 years, First Community has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.74%. 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. First Community's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FCCO for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.56 per share, representing a year-over-year earnings growth rate of 41.44%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 FCCO is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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First Community Corporation (FCCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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