Why First Commonwealth Financial (FCF) is a Top Dividend Stock for Your Portfolio
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.
Headquartered in Indiana, First Commonwealth Financial (FCF) is a Finance stock that has seen a price change of -3.37% so far this year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.3%. In comparison, the Banks - Northeast industry's yield is 2.77%, while the S&P 500's yield is 1.58%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.54 is up 4.9% from last year. In the past five-year period, First Commonwealth Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.10%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Commonwealth Financial's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.
FCF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.43 per share, with earnings expected to increase 2.14% from the year ago period.
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.
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. 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 FCF 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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