All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
The First of Long Island in Focus
Based in Glen Head, The First of Long Island (FLIC) is in the Finance sector, and so far this year, shares have seen a price change of -11.81%. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 4.2%. In comparison, the Banks - Northeast industry's yield is 2.27%, while the S&P 500's yield is 1.46%.
Looking at dividend growth, the company's current annualized dividend of $0.80 is up 3.9% from last year. The First of Long Island has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.84%. 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. The First of Long Island's current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FLIC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.94 per share, which represents a year-over-year growth rate of 7.18%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 their 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, FLIC 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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The First of Long Island Corporation (FLIC): Free Stock Analysis Report
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