ACNB (ACNB) 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. 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.

ACNB in Focus

Based in Gettysburg, ACNB (ACNB) is in the Finance sector, and so far this year, shares have seen a price change of 10.47%. The bank is currently shelling out a dividend of $0.32 per share, with a dividend yield of 2.91%. This compares to the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.52%.

In terms of dividend growth, the company's current annualized dividend of $1.28 is up 1.6% from last year. Over the last 5 years, ACNB has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.40%. 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. ACNB's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ACNB for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.43 per share, with earnings expected to increase 18.77% from the year ago period.

Bottom Line

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 ACNB is not only an attractive dividend play, but is also 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).

Zacks Investment Research

Source Zacks-com