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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Bryn Mawr Bank in Focus
Bryn Mawr Bank (BMTC) is headquartered in Bryn Mawr, and is in the Finance sector. The stock has seen a price change of 60.09% since the start of the year. Currently paying a dividend of $0.28 per share, the company has a dividend yield of 2.29%. In comparison, the Banks - Northeast industry's yield is 1.98%, while the S&P 500's yield is 1.4%.
Looking at dividend growth, the company's current annualized dividend of $1.12 is up 5.7% from last year. In the past five-year period, Bryn Mawr Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.65%. 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. Bryn Mawr Bank's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BMTC expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $2.80 per share, which represents a year-over-year growth rate of 70.73%.
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.
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. 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, BMTC 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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Bryn Mawr Bank Corporation (BMTC) : Free Stock Analysis Report
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