This is Why Northrim BanCorp (NRIM) is a Great Dividend Stock

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 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.

Northrim BanCorp in Focus

Headquartered in Anchorage, Northrim BanCorp (NRIM) is a Finance stock that has seen a price change of -12.36% so far this year. Currently paying a dividend of $0.64 per share, the company has a dividend yield of 3.75%. In comparison, the Banks - West industry's yield is 3.01%, while the S&P 500's yield is 1.73%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.56 is up 4.1% from last year. In the past five-year period, Northrim BanCorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 17.33%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Northrim's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, NRIM expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $8.05 per share, representing a year-over-year earnings growth rate of 21.60%.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, NRIM 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).

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research