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.
Headquartered in Helena, Eagle Bancorp Montana, Inc. (EBMT) is a Finance stock that has seen a price change of 5.35% so far this year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.53%. In comparison, the Banks - Midwest industry's yield is 2.9%, while the S&P 500's yield is 1.54%.
In terms of dividend growth, the company's current annualized dividend of $0.57 is up 0.9% from last year. In the past five-year period, Eagle Bancorp Montana, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.60%. 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. Eagle Bancorp Montana's current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EBMT expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.61 per share, with earnings expected to increase 29.84% 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. It's important to keep in mind that not all companies provide 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. 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, EBMT 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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