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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.
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.
Woori Bank in Focus
Woori Bank (WF) is headquartered in Seoul, and is in the Finance sector. The stock has seen a price change of 12.64% since the start of the year. The company is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3.57% compared to the Banks - Foreign industry's yield of 4.05% and the S&P 500's yield of 1.47%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.21 is up 89.7% from last year. In the past five-year period, Woori Bank has increased its dividend 2 times on a year-over-year basis for an average annual increase of 0.61%. 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, Woori Bank's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, WF expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $8.59 per share, with earnings expected to increase 15.77% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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, WF presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).