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Why Bank of Marin (BMRC) is a Top Dividend Stock for Your Portfolio

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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 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 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.

Bank of Marin in Focus

Headquartered in Novato, Bank of Marin (BMRC - Free Report) is a Finance stock that has seen a price change of 10.77% so far this year. Currently paying a dividend of $0.24 per share, the company has a dividend yield of 2.52%. In comparison, the Banks - West industry's yield is 2.11%, while the S&P 500's yield is 1.36%.

In terms of dividend growth, the company's current annualized dividend of $0.96 is up 4.3% from last year. Over the last 5 years, Bank of Marin has increased its dividend 5 times on a year-over-year basis for an average annual increase of 15.49%. 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. Right now, Bank of Marin's payout ratio is 37%, which means it paid out 37% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BMRC for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.24 per share, representing a year-over-year earnings growth rate of 0.90%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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, BMRC 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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