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 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.
Based in Los Angeles, Hanmi Financial (HAFC) is in the Finance sector, and so far this year, shares have seen a price change of 12.36%. The bank holding company is currently shelling out a dividend of $0.56 per share, with a dividend yield of 3.69%. This compares to the Banks - West industry's yield of 2.69% and the S&P 500's yield of 1.41%.
Looking at dividend growth, the company's current annualized dividend of $1.12 is up 3.7% from last year. Over the last 5 years, Hanmi Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 26.70%. 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. Hanmi Financial's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HAFC for this fiscal year. The Zacks Consensus Estimate for 2026 is $3.16 per share, representing a year-over-year earnings growth rate of 25.90%.
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, HAFC presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Hanmi Financial Corporation (HAFC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).