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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Hanover, Independent Bank Corp. (INDB) is a Finance stock that has seen a price change of 8.86% so far this year. The holding company for Rockland Trust is paying out a dividend of $0.59 per share at the moment, with a dividend yield of 3.38% compared to the Banks - Northeast industry's yield of 2.54% and the S&P 500's yield of 1.5%.
Looking at dividend growth, the company's current annualized dividend of $2.36 is up 3.5% from last year. Over the last 5 years, Independent Bank Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.67%. 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. Independent Bank Corp.'s current payout ratio is 52%, meaning it paid out 52% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for INDB for this fiscal year. The Zacks Consensus Estimate for 2025 is $5.49 per share, which represents a year-over-year growth rate of 20.66%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 have to be mindful 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 INDB is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Independent Bank Corp. (INDB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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