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Brookline Bancorp (BRKL) is a Top Dividend Stock Right Now: Should You Buy?

Zacks Equity Research

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.

Brookline Bancorp in Focus

Brookline Bancorp (BRKL) is headquartered in Boston, and is in the Finance sector. The stock has seen a price change of 16.57% since the start of the year. Currently paying a dividend of $0.1 per share, the company has a dividend yield of 2.61%. In comparison, the Financial - Savings and Loan industry's yield is 2.31%, while the S&P 500's yield is 1.92%.

Looking at dividend growth, the company's current annualized dividend of $0.42 is up 6.3% from last year. In the past five-year period, Brookline Bancorp has increased its dividend 2 times on a year-over-year basis for an average annual increase of 3.24%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Brookline's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BRKL for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.10 per share, representing a year-over-year earnings growth rate of 2.80%.

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.

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. That said, they can take comfort from the fact that BRKL 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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