All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Based in Helena, Eagle Bancorp Montana, Inc. (EBMT) is in the Finance sector, and so far this year, shares have seen a price change of 13.96%. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.26%. In comparison, the Banks - Midwest industry's yield is 2.91%, while the S&P 500's yield is 1.52%.
Looking at dividend growth, the company's current annualized dividend of $0.57 is up 0.9% from last year. Over the last 5 years, Eagle Bancorp Montana, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.76%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Eagle Bancorp Montana's current payout ratio is 40%, meaning it paid out 40% 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 $1.70 per share, with earnings expected to increase 37.10% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that EBMT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Eagle Bancorp Montana, Inc. (EBMT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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