Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Lakeland Financial (LKFN) is headquartered in Warsaw, and is in the Finance sector. The stock has seen a price change of 8.97% since the start of the year. The holding company for Lake City Bank is currently shelling out a dividend of $0.52 per share, with a dividend yield of 3.35%. This compares to the Banks - Midwest industry's yield of 2.57% and the S&P 500's yield of 1.43%.
Looking at dividend growth, the company's current annualized dividend of $2.08 is up 4% 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 11.83%. 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. Lakeland Financial's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LKFN for this fiscal year. The Zacks Consensus Estimate for 2026 is $4.30 per share, which represents a year-over-year growth rate of 7.23%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 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 LKFN 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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Lakeland Financial Corporation (LKFN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).