This is Why First Mid-Illinois Bancshares (FMBH) is a Great Dividend Stock
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does First Mid-Illinois Bancshares...
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
First Mid-Illinois Bancshares in Focus
Based in Mattoon, First Mid-Illinois Bancshares (FMBH) is in the Finance sector, and so far this year, shares have seen a price change of 21.51%. The bank holding company is paying out a dividend of $0.22 per share at the moment, with a dividend yield of 2.15% compared to the Banks - Northeast industry's yield of 2% and the S&P 500's yield of 1.39%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.88 is up 8.6% from last year. In the past five-year period, First Mid-Illinois Bancshares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 19.70%. 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. First Mid-Illinois's current payout ratio is 24%. This means it paid out 24% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FMBH expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $3.57 per share, with earnings expected to increase 32.22% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FMBH 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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First MidIllinois Bancshares, Inc. (FMBH): Free Stock Analysis Report
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