All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 (BHB) is headquartered in Bar Harbor, and is in the Finance sector. The stock has seen a price change of 1.37% since the start of the year. The bank is currently shelling out a dividend of $0.32 per share, with a dividend yield of 4.13%. This compares to the Banks - Northeast industry's yield of 2.55% and the S&P 500's yield of 1.52%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 8.5% from last year. Over the last 5 years, Bar Harbor Bankshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.96%. 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. Bar Harbor's current payout ratio is 44%, meaning it paid out 44% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BHB expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.03 per share, with earnings expected to increase 7.07% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 BHB is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Bar Harbor Bankshares, Inc. (BHB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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