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Should You Watch Heritage Commerce (HTBK) for Solid Dividend?
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With the banking industry facing turmoil due to deposit outflows and expectations of economic slowdown/recession, investors should put solid dividend-yielding stocks on the radar. Today, we are discussing one such stock, Heritage Commerce Corp (HTBK - Free Report) .
Headquartered in San Jose, CA, HTBK provides commercial and personal banking services to residents and the business/professional community in California. Over the past five years, Heritage Commerce increased the dividend twice, with an annualized dividend growth rate of 3.6%.
Considering the last day’s closing price of $8.60, the company’s dividend yield currently stands at 6.05%. This is impressive compared with the industry average of 3.13% and attractive for income investors as it represents a steady income stream.
So, is the Heritage Commerce stock worth keeping an eye on to earn a robust dividend yield? Let’s check out the company’s fundamentals to understand risk and rewards. This will help us make a proper investment decision.
HTBK has been witnessing consistent organic growth. The company’s net revenues witnessed a compound annual growth rate (CAGR) of 11.1% over the last five years (2017-2022). The rise was mainly driven by solid loan and deposit balances. During the same time frame, net loans witnessed a CAGR of 15.8% and deposits saw a CAGR of 12.1%.
Supported by steady loan demand and higher rates, along with the efforts to strengthen fee income, Heritage Commerce’s top-line growth is expected to continue. Revenues are expected to rise 9.5% this year and 1.2% in 2024.
With the Federal Reserve expected to keep interest rates high in the near term to control inflation, Heritage Commerce’s net interest margin (NIM) is likely to keep rising (though the pace of growth will slow down a bit on higher funding costs).
Additionally, HTBK’s inorganic expansion efforts are impressive and have supported its financials. In 2019, the company acquired Presidio Bank for $175.5 million. This and several other past deals have boosted the company’s market share in California.
Heritage Commerce has a solid balance sheet position. As of Mar 31, 2023, the company’s subordinated debt was $39.4 million, while total cash and cash equivalents were $306.6 million. Given the earnings strength and robust liquidity position, the company will be able to meet its debt obligations even if the economic situation worsens.
Despite near-term headwinds that include rising expenses, weak asset quality and a tough operating environment, HTBK is fundamentally solid. So far this year, shares of this Zacks Rank #3 (Hold) company have plunged 36% compared with the industry’s fall of 31.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
So, income investors should watch Heritage Commerce stock as it will help generate robust returns over time.
Other Bank Stocks With Robust Dividends
A couple of major bank stocks, like Associated Banc-Corp (ASB - Free Report) and Zions Bancorporation (ZION - Free Report) , are worth a look as these have robust dividend yields.
Considering the last day’s closing price, Associated Banc-Corp’s dividend yield currently stands at 5%. Over the past six months, shares of ASB have lost 24.7%.
Based on the last day’s closing price, Zions’ dividend yield currently stands at 5.31%. Over the past six months, shares of ZION have lost 36%.
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Should You Watch Heritage Commerce (HTBK) for Solid Dividend?
With the banking industry facing turmoil due to deposit outflows and expectations of economic slowdown/recession, investors should put solid dividend-yielding stocks on the radar. Today, we are discussing one such stock, Heritage Commerce Corp (HTBK - Free Report) .
Headquartered in San Jose, CA, HTBK provides commercial and personal banking services to residents and the business/professional community in California. Over the past five years, Heritage Commerce increased the dividend twice, with an annualized dividend growth rate of 3.6%.
Considering the last day’s closing price of $8.60, the company’s dividend yield currently stands at 6.05%. This is impressive compared with the industry average of 3.13% and attractive for income investors as it represents a steady income stream.
Heritage Commerce Corp Dividend Yield (TTM)
Heritage Commerce Corp dividend-yield-ttm | Heritage Commerce Corp Quote
So, is the Heritage Commerce stock worth keeping an eye on to earn a robust dividend yield? Let’s check out the company’s fundamentals to understand risk and rewards. This will help us make a proper investment decision.
HTBK has been witnessing consistent organic growth. The company’s net revenues witnessed a compound annual growth rate (CAGR) of 11.1% over the last five years (2017-2022). The rise was mainly driven by solid loan and deposit balances. During the same time frame, net loans witnessed a CAGR of 15.8% and deposits saw a CAGR of 12.1%.
Supported by steady loan demand and higher rates, along with the efforts to strengthen fee income, Heritage Commerce’s top-line growth is expected to continue. Revenues are expected to rise 9.5% this year and 1.2% in 2024.
With the Federal Reserve expected to keep interest rates high in the near term to control inflation, Heritage Commerce’s net interest margin (NIM) is likely to keep rising (though the pace of growth will slow down a bit on higher funding costs).
Additionally, HTBK’s inorganic expansion efforts are impressive and have supported its financials. In 2019, the company acquired Presidio Bank for $175.5 million. This and several other past deals have boosted the company’s market share in California.
Heritage Commerce has a solid balance sheet position. As of Mar 31, 2023, the company’s subordinated debt was $39.4 million, while total cash and cash equivalents were $306.6 million. Given the earnings strength and robust liquidity position, the company will be able to meet its debt obligations even if the economic situation worsens.
Despite near-term headwinds that include rising expenses, weak asset quality and a tough operating environment, HTBK is fundamentally solid. So far this year, shares of this Zacks Rank #3 (Hold) company have plunged 36% compared with the industry’s fall of 31.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
So, income investors should watch Heritage Commerce stock as it will help generate robust returns over time.
Other Bank Stocks With Robust Dividends
A couple of major bank stocks, like Associated Banc-Corp (ASB - Free Report) and Zions Bancorporation (ZION - Free Report) , are worth a look as these have robust dividend yields.
Considering the last day’s closing price, Associated Banc-Corp’s dividend yield currently stands at 5%. Over the past six months, shares of ASB have lost 24.7%.
Based on the last day’s closing price, Zions’ dividend yield currently stands at 5.31%. Over the past six months, shares of ZION have lost 36%.