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This is Why Midland States Bancorp (MSBI) is a Great Dividend Stock

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.

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.

Midland States Bancorp in Focus

Midland States Bancorp (MSBI) is headquartered in Effingham, and is in the Finance sector. The stock has seen a price change of 11.58% since the start of the year. Currently paying a dividend of $0.29 per share, the company has a dividend yield of 4.19%. In comparison, the Banks - Northeast industry's yield is 2.35%, while the S&P 500's yield is 1.58%.

Looking at dividend growth, the company's current annualized dividend of $1.16 is up 3.6% from last year. In the past five-year period, Midland States Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.30%. 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. Midland States Bancorp's current payout ratio is 30%, meaning it paid out 30% of its trailing 12-month EPS as dividend.

MSBI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.87 per share, representing a year-over-year earnings growth rate of 6.03%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MSBI presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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