Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Based in Buffalo, M&T Bank Corporation (MTB) is in the Finance sector, and so far this year, shares have seen a price change of -0.41%. The company is currently shelling out a dividend of $1.50 per share, with a dividend yield of 2.99%. This compares to the Banks - Major Regional industry's yield of 3.03% and the S&P 500's yield of 1.49%.
Looking at dividend growth, the company's current annualized dividend of $6.00 is up 5.3% from last year. Over the last 5 years, M&T Bank Corporation has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.36%. 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. M&T Bank's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MTB for this fiscal year. The Zacks Consensus Estimate for 2026 is $18.78 per share, which represents a year-over-year growth rate of 9.19%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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 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 MTB is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
SeeWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
M&T Bank Corporation (MTB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).