Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
SB Financial Group, Inc. In Focus
Based in Defiance, SB Financial Group, Inc. (SBFG) is in the Finance sector, and so far this year, shares have seen a price change of -7.91%. The company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 3.01% compared to the Banks - Northeast industry's yield of 3.04% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.58 is up 3.6% from last year. Over the last 5 years, SB Financial Group, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.97%. 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. Right now, SB Financial Group's payout ratio is 34%, which means it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SBFG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2 per share, representing a year-over-year earnings growth rate of 16.96%.
Bottom Line
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. With that in mind, SBFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SB Financial Group, Inc. (SBFG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
