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.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

Bar Harbor Bankshares in Focus

Based in Bar Harbor, Bar Harbor Bankshares (BHB) is in the Finance sector, and so far this year, shares have seen a price change of 9.16%. The bank is currently shelling out a dividend of $0.3 per share, with a dividend yield of 3.6%. This compares to the Banks - Northeast industry's yield of 2.51% and the S&P 500's yield of 1.52%.

In terms of dividend growth, the company's current annualized dividend of $1.20 is up 1.7% from last year. Bar Harbor Bankshares has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 7.72%. 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. Bar Harbor's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BHB for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.84 per share, with earnings expected to increase 0.35% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BHB 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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Bar Harbor Bankshares, Inc. (BHB) : Free Stock Analysis Report

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