Meridian Bank (MRBK) is a Top Dividend Stock Right Now: Should You Buy?

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Meridian Bank (MRBK) is headquartered in Malvern, and is in the Finance sector. The stock has seen a price change of 16.33% since the start of the year. The company is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.74% compared to the Banks - Northeast industry's yield of 2.3% and the S&P 500's yield of 1.35%.

Looking at dividend growth, the company's current annualized dividend of $0.56 is up 12% from last year. Over the last 5 years, Meridian Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 18.90%. 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. Meridian Bank's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, MRBK expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $2.30 per share, which represents a year-over-year growth rate of 21.69%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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, MRBK 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 article originally published on Zacks Investment Research (zacks.com).

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