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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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 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.
Bank of Marin in Focus
Bank of Marin (BMRC) is headquartered in Novato, and is in the Finance sector. The stock has seen a price change of -11.93% since the start of the year. Currently paying a dividend of $0.24 per share, the company has a dividend yield of 2.93%. In comparison, the Banks - West industry's yield is 2.36%, while the S&P 500's yield is 1.46%.
Looking at dividend growth, the company's current annualized dividend of $0.96 is up 2.1% from last year. In the past five-year period, Bank of Marin has increased its dividend 4 times on a year-over-year basis for an average annual increase of 14.18%. 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. Bank of Marin's current payout ratio is 36%. This means it paid out 36% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BMRC expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $2.69 per share, representing a year-over-year earnings growth rate of 1.89%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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. That said, they can take comfort from the fact that BMRC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Bank of Marin Bancorp (BMRC) : Free Stock Analysis Report
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