Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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 Warsaw, Lakeland Financial (LKFN) is a Finance stock that has seen a price change of 6.41% so far this year. The holding company for Lake City Bank is currently shelling out a dividend of $0.52 per share, with a dividend yield of 3.43%. This compares to the Banks - Midwest industry's yield of 2.47% and the S&P 500's yield of 1.38%.
Looking at dividend growth, the company's current annualized dividend of $2.08 is up 4% from last year. Over the last 5 years, Lakeland Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.83%. 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. Lakeland Financial's current payout ratio is 50%, meaning it paid out 50% of its trailing 12-month EPS as dividend.
LKFN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $4.21 per share, with earnings expected to increase 4.99% 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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, LKFN presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Lakeland Financial Corporation (LKFN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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