Why Woori Bank is a Top Dividend Stock for Your Portfolio

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.

Woori Bank in Focus

Based in Seoul, Woori Bank WF is in the Finance sector, and so far this year, shares have seen a price change of 18.1%. The company is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3.4% compared to the Banks - Foreign industry's yield of 3.85% and the S&P 500's yield of 1.58%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.21 is up 89.7% from last year. Over the last 5 years, Woori Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 0.01%. 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. Right now, Woori Bank's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for WF for this fiscal year. The Zacks Consensus Estimate for 2024 is $8.21 per share, representing a year-over-year earnings growth rate of 10.65%.

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. However, not all companies offer 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, WF 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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