We recently compiled a list of the Dividend Contenders List: Top 15. In this article, we are going to take a look at where Northrim BanCorp, Inc. (NYSE:NRIM) stands against the other dividend contenders.
Dividend stocks have long been favored by investors for the income they generate, and they become even more appealing when dividends increase over time. Investors frequently seek out companies with a strong history of raising their dividends, as this growth boosts their income over the long term. Sustaining long-term dividend growth is challenging. For instance, “dividend aristocrats” are companies that have grown their dividends consistently for at least 25 years, and only about 68 US companies have been successful in achieving this. This demonstrates how difficult it is to attain such a high standard. However, many companies still manage to build shorter dividend growth histories, showcasing their resilience and potential to reach even greater milestones over time. Dividend contenders are well-regarded for having raised their dividends for 10 straight years, though they have yet to reach the 25-year mark needed to be considered long-term dividend growers.
Investors are drawn to dividend growth stocks, as these stocks have shown strong performance over the years. Data from Ned Davis Research covering the past 50 years revealed that high-quality companies that initiate and increase dividends have delivered higher returns and lower volatility than an equal-weighted index. By holding a portfolio of dividend growth stocks, investors can potentially achieve not only favorable risk-adjusted returns but also a more stable investment experience—one less impacted by the risks of market timing, which can reduce long-term gains. This strategy can help investors build wealth steadily over time, contributing to a more secure financial future.
Recently, tech stocks have surged to the forefront, and investors are capitalizing on this momentum, temporarily overshadowing dividend stocks. However, this shift doesn’t imply a dim outlook for dividend stocks. Over the long term, dividend growth stocks have consistently demonstrated their strength and reliability. According to a report by Nuveen, companies that consistently grow or start paying dividends have delivered higher annualized returns with less volatility compared to other parts of the equity market. Although these dividend growth stocks don’t outperform in every market condition, their solid risk-adjusted returns over extended periods make them a strong foundation for an equity portfolio.
Also read: Dividend Champions List: Top 15
Michael Clarfeld, manager of the Dividend Strategy portfolios at ClearBridge Investments, supports investing in dividend stocks. Clarfeld emphasizes the value of long-term compounding, viewing dividend stocks as essential for a well-rounded portfolio. He advocates for a dividend growth approach, focusing on companies capable of steadily increasing their dividends over time. Instead of chasing high yields for immediate gains, he advises investors to consider total return, which includes the reinvestment of dividends. In an interview with Morningstar, he noted that the average company in his portfolios has compounded dividends at around 9% annually, meaning an investor’s income could potentially double every eight years. Clarfeld further said that dividend investing centers on evaluating a company’s cash flows and how they allocate payouts to investors.
In this dividend contenders list, we will take a look at companies that have raised their payouts for at least 10 consecutive years.
Our Methodology:
This list focuses on dividend contenders—companies known for raising their dividends consistently for 10 years but less than 25. From this group, we selected those with the highest dividend yields as of November 11, ranked from lowest to highest yield.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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Northrim BanCorp, Inc. (NYSE:NRIM)
Dividend Yield as of September 28: 3.24%
Northrim BanCorp, Inc. (NYSE:NRIM) is an Alaska-based bank holding company that offers various financial products and services including checking and savings accounts, loans, mortgages, credit cards, investment services, treasury management, and online banking facilities. The company’s strategic emphasis on gaining market share, while upholding a disciplined credit culture, resulted in another strong quarter. Ongoing investments in infrastructure and personnel are attracting new clients who value the distinctive service offered. Looking ahead, the company remains optimistic about further growth in deposits and loans across its expanding presence in Alaska.
Northrim BanCorp, Inc. (NYSE:NRIM) experienced solid deposit-funded loan growth in the third quarter. Both deposits and loans grew by 7% compared to the end of the second quarter. Additionally, its deposit market share rose by 4% over the past year and by 42% over the past five years. Its cash position is solid which makes it a strong dividend payer. The company’s trailing twelve-month operating cash flow came in at $5.79 million.
Northrim BanCorp, Inc. (NYSE:NRIM) currently offers a quarterly dividend of $0.62 per share, having raised it by $1.6% in August this year. Through this increase, the company stretched its dividend growth streak to 14 years, which makes NRIM one of the best dividend stocks on our dividend contenders list. The stock has a dividend yield of 3.24%, as of November 11.
As of Q2 2024, 7 hedge funds in Insider Monkey’s database owned stakes in Northrim BanCorp, Inc. (NYSE:NRIM), which remained unchanged from the previous quarter. These stakes are worth $8.5 million in total.
Overall NRIM ranks 13th on our list of the top dividend contenders. While we acknowledge the potential of NRIM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NRIM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
