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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Based in Sandusky, Civista Bancshares (CIVB) is in the Finance sector, and so far this year, shares have seen a price change of 9%. The bank holding company is currently shelling out a dividend of $0.18 per share, with a dividend yield of 2.97%. This compares to the Banks - Midwest industry's yield of 2.59% and the S&P 500's yield of 1.45%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 5.9% from last year. Over the last 5 years, Civista Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.85%. 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. Civista Bancshares's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
CIVB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $2.84 per share, representing a year-over-year earnings growth rate of 1.79%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 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 CIVB 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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Civista Bancshares, Inc. (CIVB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).