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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Headquartered in Buffalo, M&T Bank Corporation (MTB) is a Finance stock that has seen a price change of -2.82% so far this year. Currently paying a dividend of $1.50 per share, the company has a dividend yield of 3.28%. In comparison, the Banks - Major Regional industry's yield is 3.53%, while the S&P 500's yield is 1.51%.
Looking at dividend growth, the company's current annualized dividend of $6.00 is up 12.1% from last year. Over the last 5 years, M&T Bank Corporation has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.36%. 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. M&T Bank's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MTB for this fiscal year. The Zacks Consensus Estimate for 2025 is $16.51 per share, with earnings expected to increase 10.95% 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. 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. With that in mind, MTB 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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M&T Bank Corporation (MTB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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