Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Chico, TriCo (TCBK) is a Finance stock that has seen a price change of 13.05% so far this year. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 2.69%. In comparison, the Banks - West industry's yield is 2.57%, while the S&P 500's yield is 1.45%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 4.3% from last year. Over the last 5 years, TriCo has increased its dividend 3 times on a year-over-year basis for an average annual increase of 9.48%. 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. TriCo's current payout ratio is 36%, meaning it paid out 36% of its trailing 12-month EPS as dividend.
TCBK is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $4.22 per share, representing a year-over-year earnings growth rate of 14.05%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, TCBK 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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TriCo Bancshares (TCBK): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).