Getting 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 investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Headquartered in Honolulu, Central Pacific Financial (CPF) is a Finance stock that has seen a price change of -0.03% so far this year. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 3.72%. In comparison, the Banks – West industry’s yield is 2.93%, while the S&P 500’s yield is 1.56%.
Looking at dividend growth, the company’s current annualized dividend of $1.08 is up 3.8% from last year. Central Pacific Financial has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 3.26%. Any future dividend growth will depend on both earnings growth and the company’s payout ratio; a payout ratio is the proportion of a firm’s annual earnings per share that it pays out as a dividend. Central Pacific Financial’s current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.
CPF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $2.75 per share, representing a year-over-year earnings growth rate of 17.52%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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, CPF presents a compelling investment opportunity; it’s not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
