Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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.
Northrim BanCorp in Focus
Based in Anchorage, Northrim BanCorp (NRIM) is in the Finance sector, and so far this year, shares have seen a price change of -3.21%. Currently paying a dividend of $0.64 per share, the company has a dividend yield of 3.39%. In comparison, the Banks - West industry's yield is 3.33%, while the S&P 500's yield is 1.69%.
In terms of dividend growth, the company's 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 17.16%. 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. Northrim's current payout ratio is 37%. This means it paid out 37% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for NRIM for this fiscal year. The Zacks Consensus Estimate for 2025 is $8.05 per share, which represents a year-over-year growth rate of 21.60%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, NRIM 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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Northrim BanCorp Inc (NRIM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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