This is Why Banc of California (BANC) is a Great Dividend Stock

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

Based in Los Angeles, Banc of California (BANC) is in the Finance sector, and so far this year, shares have seen a price change of -10.01%. The banking service and lending company is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.77%. This compares to the Banks - Southwest industry's yield of 1.78% and the S&P 500's yield of 1.46%.

Looking at dividend growth, the company's current annualized dividend of $0.48 is up 20% from last year. Over the last 5 years, Banc of California has increased its dividend 1 times on a year-over-year basis for an average annual increase of 16.61%. 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. Banc of California's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BANC for this fiscal year. The Zacks Consensus Estimate for 2026 is $1.72 per share, which represents a year-over-year growth rate of 27.41%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers its 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. With that in mind, BANC 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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This article originally published on Zacks Investment Research (zacks.com).

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