Dividend Investing: Is 1st Source Corporation (SRCE) Worth Your Attention?
Dividends are a cherished reward for investors who choose to buy stocks and hold them for the long term. These regular payments, made out of a company’s earnings, provide a steady income stream and contribute to capital appreciation. However, finding a dividend stock that offers a generous yield, a strong financial position, and a reliable track record is no simple task. In this article, we will delve into the case of 1st Source Corporation (SRCE) and assess whether it is a worthy addition to a dividend investor’s portfolio.
Overview of 1st Source Corporation
Founded in 1863 and headquartered in South Bend, Indiana, 1st Source Corporation is a financial holding company with a diverse portfolio of banking, insurance, and wealth management services. Its primary business is conducted through its subsidiary, 1st Source Bank, which operates more than 70 banking centers in Indiana, Michigan, and Ohio.
Financial Performance and Dividend History
Over the past decade, 1st Source Corporation has demonstrated a consistent track record of financial growth and profitability. Its net income has grown from $81.6 million in 2012 to $118.1 million in 2021, representing a compound annual growth rate (CAGR) of 3.6%. This growth has been underpinned by an increase in net interest income, non-interest income, and a reduction in non-performing assets.
As for dividends, the company has raised its annual dividend payment every year since 2011, increasing it from $0.16 per share to $0.84 per share as of 2021. This translates to a current dividend yield of 2.2%, which is higher than the average yield for the S&P 500.
Why 1st Source Corporation is an Attractive Dividend Stock
There are several reasons why 1st Source Corporation is an appealing dividend stock:
- Consistent Dividend Growth: As mentioned earlier, the company has increased its dividend every year since 2011. This consistent dividend growth is a strong indicator of the company’s financial health and its commitment to rewarding shareholders.
- Stable Business Model: The financial services sector is known for its stability and resilience. Banks, in particular, tend to be less volatile than other industries due to their steady revenue streams and the essential nature of their services.
- Strong Balance Sheet: 1st Source Corporation has a strong balance sheet, with a debt-to-equity ratio of 0.63 and a Tier 1 Leverage Ratio of 7.7%. These ratios indicate that the company has a healthy amount of equity and a manageable level of debt, which positions it well to weather economic downturns.
Impact on Individuals and the World
For individual investors, owning shares of 1st Source Corporation can provide a steady source of income through its dividends. This income can be used to cover living expenses, save for retirement, or reinvested to grow the investment further. Additionally, the company’s consistent financial performance and strong balance sheet provide peace of mind, knowing that the investment is backed by a financially sound business.
On a larger scale, the financial services sector, and specifically banks like 1st Source Corporation, play a crucial role in the global economy. They provide the capital and services necessary for businesses and individuals to operate and grow. By offering attractive dividend yields, these companies can attract long-term investors, who, in turn, provide the stable funding needed for the sector to thrive.
Conclusion
In conclusion, 1st Source Corporation is a strong contender for investors seeking a reliable dividend stock. Its consistent financial growth, commitment to increasing dividends, and strong balance sheet make it an attractive option for those looking to add a steady income stream to their portfolio. Furthermore, the company’s role in the financial services sector and its contribution to the global economy add an additional layer of value to the investment.
However, as with any investment, it is essential to conduct thorough research and consider your personal financial situation before making a decision. Diversification is also crucial to minimize risk and maximize potential returns. With that said, 1st Source Corporation is certainly worth exploring for those interested in dividend investing.
