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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 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.
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 -8.59% since the start of the year. The bank holding company is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.23% compared to the Banks - West industry's yield of 1.99% and the S&P 500's yield of 1.88%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 15% from last year. Bank of Marin has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 14.67%. 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 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BMRC for this fiscal year. The Zacks Consensus Estimate for 2020 is $2.51 per share, with earnings expected to increase 1.21% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 BMRC is not only an attractive dividend play, but is also 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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