All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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.
Trustmark in Focus
Trustmark (TRMK) is headquartered in Jackson, and is in the Finance sector. The stock has seen a price change of -12.64% since the start of the year. The holding company for Trustmark National Bank is currently shelling out a dividend of $0.24 per share, with a dividend yield of 3.11%. This compares to the Banks - Southeast industry's yield of 2.52% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $0.96 is up 4.3% from last year. Trustmark has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 0.24%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Trustmark's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, TRMK expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.37 per share, with earnings expected to increase 10.86% from the year ago period.
Bottom Line
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, TRMK 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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Trustmark Corporation (TRMK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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