TriCo (TCBK) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Based in Chico, TriCo (TCBK) is in the Finance sector, and so far this year, shares have seen a price change of 22.25%. Currently paying a dividend of $0.36 per share, the company has a dividend yield of 2.49%. In comparison, the Banks - West industry's yield is 2.46%, while the S&P 500's yield is 1.32%.

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 35%, meaning it paid out 35% 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 $4.28 per share, representing a year-over-year earnings growth rate of 15.68%.

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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TCBK 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).

Zacks Investment Research

Source Zacks-com