Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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

Northrim BanCorp (NRIM) is headquartered in Anchorage, and is in the Finance sector. The stock has seen a price change of -14.05% since the start of the year. Currently paying a dividend of $0.6 per share, the company has a dividend yield of 4.96%. In comparison, the Banks - West industry's yield is 3.29%, while the S&P 500's yield is 1.57%.

Looking at dividend growth, the company's current annualized dividend of $2.44 is up 1.7% from last year. Northrim BanCorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 16.72%. 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 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.

NRIM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $5 per share, representing a year-over-year earnings growth rate of 11.36%.

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. It's important to keep in mind that not all companies provide 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. 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 #1 (Strong 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

Northrim BanCorp Inc (NRIM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research