Essa Bancorp (ESSA) is a Top Dividend Stock Right Now: Should You Buy?
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Essa Bancorp (ESSA) have what it takes? Let's...
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Essa Bancorp in Focus
Headquartered in Stroudsburg, Essa Bancorp (ESSA) is a Finance stock that has seen a price change of 14.93% so far this year. The bank is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.78% compared to the Financial - Savings and Loan industry's yield of 2.44% and the S&P 500's yield of 1.29%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 2.1% from last year. Over the last 5 years, Essa Bancorp has increased its dividend 3 times on a year-over-year basis for an average annual increase of 7.39%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Essa Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
ESSA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $1.73 per share, which represents a year-over-year growth rate of 4.85%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that ESSA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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ESSA Bancorp, Inc. (ESSA): Free Stock Analysis Report
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