Trustmark (TRMK) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Trustmark in Focus

Headquartered in Jackson, Trustmark (TRMK) is a Finance stock that has seen a price change of -0.71% so far this year. The holding company for Trustmark National Bank is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 2.73% compared to the Banks - Southeast industry's yield of 2.33% and the S&P 500's yield of 1.59%.

In terms of dividend growth, the company's current annualized dividend of $0.96 is up 4.3% from last year. Over the last 5 years, Trustmark has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.24%. 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. Trustmark's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.

TRMK is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.44 per share, which represents a year-over-year growth rate of 13.16%.

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.

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. That said, they can take comfort from the fact that TRMK 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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This article originally published on Zacks Investment Research (zacks.com).

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