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This is Why Heritage Commerce (HTBK) is a Great Dividend Stock
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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.
Heritage Commerce in Focus
Based in San Jose, Heritage Commerce (HTBK - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 11.64%. The holding company for Heritage Bank of Commerce is currently shelling out a dividend of $0.12 per share, with a dividend yield of 3.79%. This compares to the Banks - West industry's yield of 1.89% and the S&P 500's yield of 1.89%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 9.1% from last year. Over the last 5 years, Heritage Commerce has increased its dividend 5 times on a year-over-year basis for an average annual increase of 19.12%. 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. Heritage Commerce's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HTBK for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.22 per share, with earnings expected to increase 15.09% 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. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HTBK 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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This is Why Heritage Commerce (HTBK) 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 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.
Heritage Commerce in Focus
Based in San Jose, Heritage Commerce (HTBK - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 11.64%. The holding company for Heritage Bank of Commerce is currently shelling out a dividend of $0.12 per share, with a dividend yield of 3.79%. This compares to the Banks - West industry's yield of 1.89% and the S&P 500's yield of 1.89%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 9.1% from last year. Over the last 5 years, Heritage Commerce has increased its dividend 5 times on a year-over-year basis for an average annual increase of 19.12%. 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. Heritage Commerce's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HTBK for this fiscal year. The Zacks Consensus Estimate for 2019 is $1.22 per share, with earnings expected to increase 15.09% 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. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, HTBK 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).