Investar (ISTR) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.

Headquartered in Baton Rouge, Investar (ISTR) is a Finance stock that has seen a price change of -0.91% so far this year. The holding company for Investar Bank is paying out a dividend of $0.11 per share at the moment, with a dividend yield of 2.02% compared to the Banks - Southeast industry's yield of 2.34% and the S&P 500's yield of 1.55%.

Looking at dividend growth, the company's current annualized dividend of $0.44 is up 7.3% from last year. Over the last 5 years, Investar has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.29%. 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. Investar's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ISTR for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.93 per share, which represents a year-over-year growth rate of 2.12%.

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 its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ISTR 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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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com