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Bryn Mawr Bank (BMTC) is a Top Dividend Stock Right Now: Should You Buy?

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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 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.

Bryn Mawr Bank in Focus

Headquartered in Bryn Mawr, Bryn Mawr Bank (BMTC - Free Report) is a Finance stock that has seen a price change of 52.74% so far this year. Currently paying a dividend of $0.27 per share, the company has a dividend yield of 2.31%. In comparison, the Banks - Northeast industry's yield is 1.94%, while the S&P 500's yield is 1.29%.

Looking at dividend growth, the company's current annualized dividend of $1.08 is up 1.9% from last year. Over the last 5 years, Bryn Mawr Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.02%. 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. Bryn Mawr Bank's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BMTC for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.76 per share, with earnings expected to increase 68.29% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 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 BMTC 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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