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Are You Looking for a High-Growth Dividend Stock? Bar Harbor Bankshares (BHB) Could Be a Great Choice

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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. However, 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 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.

Bar Harbor Bankshares in Focus

Headquartered in Bar Harbor, Bar Harbor Bankshares (BHB - Free Report) is a Finance stock that has seen a price change of 2.14% so far this year. The bank is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 3.25% compared to the Banks - Northeast industry's yield of 2.21% and the S&P 500's yield of 1.45%.

Looking at dividend growth, the company's current annualized dividend of $0.96 is up 2.1% from last year. Bar Harbor Bankshares has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 5.89%. 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, Bar Harbor's payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, BHB expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $2.87 per share, with earnings expected to increase 5.51% 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. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BHB 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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