Why Zions (ZION) is a Top Dividend Stock for Your Portfolio
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 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.
Headquartered in Salt Lake City, Zions (ZION) is a Finance stock that has seen a price change of -2.01% so far this year. The financial holding company is currently shelling out a dividend of $0.43 per share, with a dividend yield of 3.24%. This compares to the Banks - West industry's yield of 3.1% and the S&P 500's yield of 1.5%.
Looking at dividend growth, the company's current annualized dividend of $1.72 is up 3.6% from last year. Over the last 5 years, Zions has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.20%. 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. Zions's current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, ZION expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.78 per share, representing a year-over-year earnings growth rate of 16.77%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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. 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, ZION presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
