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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. 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.
Sierra Bancorp in Focus
Sierra Bancorp (BSRR) is headquartered in Porterville, and is in the Finance sector. The stock has seen a price change of 12.04% since the start of the year. The parent company of Bank of the Sierra is currently shelling out a dividend of $0.21 per share, with a dividend yield of 3.13%. This compares to the Banks - West industry's yield of 1.84% and the S&P 500's yield of 1.35%.
In terms of dividend growth, the company's current annualized dividend of $0.84 is up 5% from last year. Sierra Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.40%. 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. Right now, Sierra Bancorp's payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BSRR expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $2.54 per share, representing a year-over-year earnings growth rate of 9.48%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BSRR 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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Sierra Bancorp (BSRR) : Free Stock Analysis Report
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