Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor’s dream. However, 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 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.
Community Trust Bancorp (CTBI) is headquartered in Pikeville, and is in the Finance sector. The stock has seen a price change of -2.73% since the start of the year. The bank holding company for Community Trust Bank is paying out a dividend of $0.47 per share at the moment, with a dividend yield of 3.64% compared to the Banks – Southeast industry’s yield of 2.4% and the S&P 500’s yield of 1.57%.
Taking a look at the company’s dividend growth, its current annualized dividend of $1.88 is up 1.1% from last year. Community Trust Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 5.47%. 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. Community Trust Bancorp’s current payout ratio is 41%, meaning it paid out 41% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CTBI expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.06 per share, which represents a year-over-year growth rate of 9.76%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CTBI 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).
