Brookline Bancorp (BRKL) 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. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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.

Brookline Bancorp in Focus

Headquartered in Boston, Brookline Bancorp (BRKL) is a Finance stock that has seen a price change of 11.72% so far this year. Currently paying a dividend of $0.1 per share, the company has a dividend yield of 2.72%. In comparison, the Financial - Savings and Loan industry's yield is 2.16%, while the S&P 500's yield is 1.96%.

In terms of dividend growth, the company's current annualized dividend of $0.42 is up 6.3% from last year. Brookline Bancorp has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 3.24%. 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. Brookline's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.

BRKL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $1.10 per share, which represents a year-over-year growth rate of 2.80%.

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.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BRKL is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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