gAchieving 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-oriented investor, your primary goal is to generate 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 think of it by its dividend yield, a metric that measures the dividend as a percentage of the current share price. Many academic studies show that dividends are a significant part of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Focus on the Northeast Community Bancorp
Northeast Community Bancorp (NECB) is headquartered in White Plains and is part of the financial industry. The stock has seen a price change of -3.68% since the start of the year. The bank holding company currently pays a dividend of $0.24 per share, with a dividend yield of 2.24% compared to the Banks – Northeast industry yield of 2.34% and the S&P 500 yield of 1.51%.
In terms of dividend growth, the company’s current annualized dividend of $0.24 is up 18.8% from last year. Northeast Community Bancorp has increased its dividend 1 time on an annual basis in the last 5 years for an average annual increase of 16.32%. Future dividend growth will depend on earnings growth as well as the payout ratio, which is the proportion of a company’s annual earnings per share that it pays out as a dividend. Northeast Community Bancorp’s current payout ratio is 28%. That means it paid out 28% of its 12-month EPS as a dividend.
During this fiscal year, the CNÉB expects solid earnings growth. Zacks consensus estimate for 2022 is $1.11 per share, with earnings expected to rise 48% from the prior year period.
From dramatically improving earnings from equity investments and reducing overall portfolio risk to providing tax benefits, investors love dividends for a variety of reasons. It’s important to keep in mind that not all companies provide a quarterly payment.
High-growth companies or tech start-ups, for example, rarely pay a dividend to their shareholders, while larger, more established companies with more secure earnings are often considered the best dividend options. During periods of rising interest rates, income-oriented investors should be aware that high-yielding stocks tend to struggle. With this in mind, the CNÉB presents an attractive investment opportunity; it’s not only an attractive dividend play, but the stock also boasts a strong Zacks ranking of #2 (buy).
5 shares ready to double
Each was handpicked by a Zacks expert as the #1 preferred stock to earn +100% or more in 2021. Previous recommendations have skyrocketed +143.0%, +175.9%, + 498.3% and +673.0%.
Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.