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.
ServisFirst Bancshares (SFBS) is headquartered in Birmingham, and is in the Finance sector. The stock has seen a price change of 5.15% since the start of the year. The holding company for ServisFirst Bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.01% compared to the Financial - Savings and Loan industry's yield of 2.46% and the S&P 500's yield of 1.45%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 13.4% from last year. Over the last 5 years, ServisFirst Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.72%. 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. ServisFirst's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SFBS expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $6.40 per share, representing a year-over-year earnings growth rate of 21.90%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 its 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. With that in mind, SFBS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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ServisFirst Bancshares, Inc. (SFBS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).