Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Pikeville, Community Trust Bancorp (CTBI) is a Finance stock that has seen a price change of 35.17% so far this year. Currently paying a dividend of $0.53 per share, the company has a dividend yield of 2.78%. In comparison, the Banks - Southeast industry's yield is 1.89%, while the S&P 500's yield is 1.34%.
Looking at dividend growth, the company's current annualized dividend of $2.12 is up 6% from last year. Over the last 5 years, Community Trust Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.32%. 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. Community Trust Bancorp's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
CTBI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $6.41 per share, with earnings expected to increase 18.05% from the year ago period.
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.
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 have to be mindful 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 CTBI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Community Trust Bancorp, Inc. (CTBI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).