All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Eagle Bancorp Montana, Inc. In Focus

Eagle Bancorp Montana, Inc. (EBMT) is headquartered in Helena, and is in the Finance sector. The stock has seen a price change of 16.63% since the start of the year. The company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 3.19% compared to the Banks - Midwest industry's yield of 3.05% and the S&P 500's yield of 1.56%.

In terms of dividend growth, the company's current annualized dividend of $0.57 is up 0.9% 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 10.60%. 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. Right now, Eagle Bancorp Montana's payout ratio is 46%, which means it paid out 46% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, EBMT expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.61 per share, with earnings expected to increase 29.84% 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.

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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EBMT 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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Eagle Bancorp Montana, Inc. (EBMT) : Free Stock Analysis Report

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

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