Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Brookline Bancorp in Focus
Headquartered in Boston, Brookline Bancorp (BRKL) is a Finance stock that has seen a price change of 8.76% so far this year. The bank holding company is paying out a dividend of $0.11 per share at the moment, with a dividend yield of 2.93% compared to the Financial - Savings and Loan industry's yield of 2.23% and the S&P 500's yield of 1.88%.
In terms of dividend growth, the company's current annualized dividend of $0.44 is up 11.4% from last year. Brookline Bancorp has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 4.36%. 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. Brookline's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
BRKL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.16 per share, which represents a year-over-year growth rate of 8.41%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BRKL 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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Brookline Bancorp, Inc. (BRKL) : Free Stock Analysis Report
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