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 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.
Colony Bankcorp in Focus
Colony Bankcorp (CBAN) is headquartered in Fitzgerald, and is in the Finance sector. The stock has seen a price change of -3.41% since the start of the year. The bank holding company is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.95%. This compares to the Banks - Southeast industry's yield of 2.38% and the S&P 500's yield of 1.64%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.46 is up 2.2% from last year. Over the last 5 years, Colony Bankcorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.04%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Colony Bankcorp's current payout ratio is 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
CBAN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.71 per share, with earnings expected to increase 17.12% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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, CBAN 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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Colony Bankcorp, Inc. (CBAN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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