Mercantile Bank (MBWM) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.Headquartered in Grand Rapids, Mercantile Bank (MBWM) is a Finance stock that has seen a price change of 11.17% so far this year. The holding company for Mercantile Bank of Michigan is paying out a dividend of $0.37 per share at the moment, with a dividend yield of 2.99% compared to the Banks - Midwest industry's yield of 2.99% and the S&P 500's yield of 1.49%.Looking at dividend growth, the company's current annualized dividend of $1.48 is up 4.2% from last year. Over the last 5 years, Mercantile Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.33%. 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. Mercantile Bank's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.Looking at this fiscal year, MBWM expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.23 per share, representing a year-over-year earnings growth rate of 6.09%.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 have to be mindful 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 MBWM is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mercantile Bank Corporation (MBWM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks