Pinnacle Financial (PNFP) Could Be a Great Choice

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

Pinnacle Financial (PNFP) is headquartered in Nashville, and is in the Finance sector. The stock has seen a price change of -7.92% since the start of the year. Currently paying a dividend of $0.50 per share, the company has a dividend yield of 2.28%. In comparison, the Banks - Southeast industry's yield is 2.15%, while the S&P 500's yield is 1.47%.

Looking at dividend growth, the company's current annualized dividend of $2.00 is up 108.3% from last year. Over the last 5 years, Pinnacle Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 7.56%. 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. Pinnacle Financial's current payout ratio is 11%, meaning it paid out 11% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for PNFP for this fiscal year. The Zacks Consensus Estimate for 2026 is $10.22 per share, representing a year-over-year earnings growth rate of 22.10%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PNFP 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).

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Source Zacks-com