Are You Looking for a High-Growth Dividend Stock? Eagle Bancorp Montana, Inc. (EBMT) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

Eagle Bancorp Montana, Inc. In Focus

Based in Helena, Eagle Bancorp Montana, Inc. (EBMT) is in the Finance sector, and so far this year, shares have seen a price change of -9.62%. The company is currently shelling out a dividend of $0.13 per share, with a dividend yield of 2.41%. This compares to the Banks - Midwest industry's yield of 2.59% and the S&P 500's yield of 1.5%.

Looking at dividend growth, the company's current annualized dividend of $0.50 is up 12.4% from last year. Eagle Bancorp Montana, Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.83%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Eagle Bancorp Montana, Inc.'s current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for EBMT for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.57 per share, which represents a year-over-year growth rate of 18.43%.

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. That said, they can take comfort from the fact that EBMT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.