Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Gulfport, Hancock Whitney (HWC) is a Finance stock that has seen a price change of 16.88% so far this year. The holding company of Whitney Bank and Hancock Bank is currently shelling out a dividend of $0.50 per share, with a dividend yield of 2.69%. This compares to the Banks - Southeast industry's yield of 2.03% and the S&P 500's yield of 1.41%.
Looking at dividend growth, the company's current annualized dividend of $2.00 is up 11.1% from last year. Over the last 5 years, Hancock Whitney has increased its dividend 3 times on a year-over-year basis for an average annual increase of 11.55%. 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. Hancock Whitney's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HWC for this fiscal year. The Zacks Consensus Estimate for 2026 is $6.47 per share, with earnings expected to increase 13.11% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 its 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. That said, they can take comfort from the fact that HWC 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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Hancock Whitney Corporation (HWC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).