Buy This Stock Before It Becomes a Dividend Aristocrat

Income investors want consistency — a stock that is going to deliver increasing dividends year-in and year-out. The best of these of are known as Dividend Aristocrats, S&P 500 companies that have increased their dividend each year for at least 25 years in a row.

There are only 65 stocks that currently hold this status. But there are many more that are knocking on the door. One of them is Republic Bancorp (NASDAQ:RBCAA), the holding company of Republic Bank, a regional bank based in Louisville, Ky. It has about 42 banking centers throughout Kentucky, Indiana, Ohio, Tennessee, and Florida — along with free access at over 90,000 ATMs.

Republic just increased its dividend for the 23rd straight year in January. Letʻs take a look at why income investors should consider buying this stock before it becomes a Dividend Aristocrat.

Republic by the numbers

Republic’s stock is up roughly 25% year to date at Thursday’s prices. Last year, a particularly difficult one for banks, it was down 20%, but over the past 10 years it had only one other year that it finished with a negative return — 2017, when it was down 1.5%. Over that period, Republic stock price has an annualized return of 7.5%. That is below the S&P 500, but the consistency is what stands out, particularly for income investors.

The quarterly dividend is solid, at $0.31 per share with a yield of 2.75% — well above the average for the banking industry (1.6%) and the S&P 500 (1.5%). Republic also has a payout ratio of 30%, meaning just 30% of its earnings go toward paying the dividend — a very sustainable figure.

Where Republic is headed

Republic is two more annual increases away from reaching the Dividend Aristocrat status, and it is in a good position to get there. The company is coming off its most difficult year in recent history, as earnings were down 9% for the year, compared to the previous year. Much of it was due to increases in allowance for credit losses due to the hardships caused by the pandemic and lower net interest margins due to historically low interest rates. 

Full story on

Leave a Comment