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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Middlefield Banc Corp. In Focus
Headquartered in Middlefiled, Middlefield Banc Corp. (MBCN) is a Finance stock that has seen a price change of -11.8% so far this year. Currently paying a dividend of $0.21 per share, the company has a dividend yield of 3.4%. In comparison, the Banks - Northeast industry's yield is 2.74%, while the S&P 500's yield is 1.65%.
Looking at dividend growth, the company's current annualized dividend of $0.84 is up 5% from last year. Middlefield Banc Corp. has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 8.05%. 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. Middlefield Banc's current payout ratio is 42%. This means it paid out 42% of its trailing 12-month EPS as dividend.
MBCN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.96 per share, with earnings expected to increase 2.08% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 their 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. With that in mind, MBCN 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Middlefield Banc Corp. (MBCN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
