Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Home Bancorp in Focus
Based in Lafayette, Home Bancorp (HBCP – Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 7.08%. The financial holding company is paying out a dividend of $0.27 per share at the moment, with a dividend yield of 2.18% compared to the Banks – Southeast industry’s yield of 2.22% and the S&P 500’s yield of 1.53%.
Taking a look at the company’s dividend growth, its current annualized dividend of $1.08 is up 6.9% from last year. In the past five-year period, Home Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.74%. 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. Home Bancorp’s current payout ratio is 23%, meaning it paid out 23% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HBCP for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.78 per share, representing a year-over-year earnings growth rate of 4.82%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it’s fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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 HBCP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Financial Market Newsflash
No financial news published today. Check back later.
