Lakeland Financial (LKFN) Could Be a Great Choice

By Zacks Equity Research | June 06, 2025, 11:45 AM

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.

Lakeland Financial in Focus

Headquartered in Warsaw, Lakeland Financial (LKFN) is a Finance stock that has seen a price change of -13.9% so far this year. The holding company for Lake City Bank is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.38% compared to the Banks - Midwest industry's yield of 3.17% and the S&P 500's yield of 1.56%.

In terms of dividend growth, the company's current annualized dividend of $2 is up 4.2% 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 12.44%. 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. Right now, Lakeland Financial's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.

LKFN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.76 per share, representing a year-over-year earnings growth rate of 8.36%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that LKFN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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