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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hanmi Financial in Focus
Headquartered in Los Angeles, Hanmi Financial (HAFC) is a Finance stock that has seen a price change of -3.73% so far this year. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 4.75%. In comparison, the Banks - West industry's yield is 3.33%, while the S&P 500's yield is 1.65%.
In terms of dividend growth, the company's current annualized dividend of $1.08 is up 8% from last year. In the past five-year period, Hanmi Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 27.60%. 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, Hanmi Financial's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, HAFC expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.55 per share, representing a year-over-year earnings growth rate of 24.39%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, HAFC 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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Hanmi Financial Corporation (HAFC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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