All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 Gulfport, Hancock Whitney (HWC) is a Finance stock that has seen a price change of 16.12% so far this year. The holding company of Whitney Bank and Hancock Bank is paying out a dividend of $0.45 per share at the moment, with a dividend yield of 2.83% compared to the Banks - Southeast industry's yield of 2.24% and the S&P 500's yield of 1.49%.
Looking at dividend growth, the company's current annualized dividend of $1.80 is up 20% from last year. Over the last 5 years, Hancock Whitney has increased its dividend 3 times on a year-over-year basis for an average annual increase of 11.55%. 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. Hancock Whitney's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HWC for this fiscal year. The Zacks Consensus Estimate for 2025 is $5.60 per share, with earnings expected to increase 5.26% from the year ago period.
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.
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, HWC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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Hancock Whitney Corporation (HWC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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