Yahoo Finance Columbia Banking (COLB) is a Top Dividend Stock Right Now: Should You Buy?
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.
Columbia Banking in Focus
Based in Tacoma, Columbia Banking (COLB) is in the Finance sector, and so far this year, shares have seen a price change of -21.31%. The bank holding company is paying out a dividend of $0.36 per share at the moment, with a dividend yield of 6.07% compared to the Banks - West industry's yield of 3.54% and the S&P 500's yield of 1.72%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 20% from last year. Columbia Banking has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 2.92%. 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, Columbia Banking's payout ratio is 39%, which means it paid out 39% of its trailing 12-month EPS as dividend.
COLB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.57 per share, representing a year-over-year earnings growth rate of 5.31%.
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.
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. With that in mind, COLB 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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Columbia Banking System, Inc. (COLB) : Free Stock Analysis Report
