All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Brookline Bancorp in Focus
Brookline Bancorp (BRKL - Free Report) is headquartered in Boston, and is in the Finance sector. The stock has seen a price change of 8.97% since the start of the year. Currently paying a dividend of $0.1 per share, the company has a dividend yield of 2.79%. In comparison, the Financial - Savings and Loan industry's yield is 2.18%, while the S&P 500's yield is 1.97%.
Looking at dividend growth, the company's current annualized dividend of $0.42 is up 6.3% from last year. In the past five-year period, Brookline Bancorp has increased its dividend 2 times on a year-over-year basis for an average annual increase of 3.24%. 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. Brookline's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.
BRKL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.10 per share, with earnings expected to increase 2.80% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BRKL presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).