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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
ServisFirst Bancshares (SFBS) is headquartered in Birmingham, and is in the Finance sector. The stock has seen a price change of 4.93% since the start of the year. The holding company for ServisFirst Bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.02% compared to the Financial - Savings and Loan industry's yield of 2.63% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 13.4% from last year. Over the last 5 years, ServisFirst Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.72%. 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. ServisFirst's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SFBS expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $6.40 per share, which represents a year-over-year growth rate of 21.90%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious 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 SFBS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (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
ServisFirst Bancshares, Inc. (SFBS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
