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3 Small-Cap Bank Stocks With Recent Dividend Hikes to Watch

After almost two months of impressive performance since mid-June, equity markets have again witnessed an extreme downturn. With volatility returning to the U.S. stock markets on renewed macroeconomic concerns, investors must remain cautious and shouldn’t take hasty investment decisions.

Amid such a challenging operating backdrop, investors must bet on stocks with a track record of steady and incremental dividend payouts to safeguard their portfolio. This is because dividend-paying stocks have a long history of profitability and a robust business model, which help them endure market volatility.

Hence, this investment strategy will help investors generate steady returns. So, today we are discussing three small-cap banks – Summit Financial Group, Inc. SMMF, TriCo Bancshares TCBK and Stock Yards Bancorp, Inc. SYBT – that recently announced a dividend hike.

At present, banks are in the limelight as the Federal Reserve has been rising interest rates since mid-March, and there are chances of more such increases in the coming days amid raging inflation and a tighter job market. This, along with decent economic growth and a rise in loan demand, makes bank stocks an investor favorite.

The above-mentioned banks have been increasing quarterly dividends on a regular basis, thus enhancing shareholder value. Also, over the past year, these stocks have recorded solid returns and currently trading well above the Zacks Finance sector.

One-year Price Performance

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Now, let’s discuss these bank stocks in detail:

Summit Financial, based in Moorefield, WV, provides community banking and other financial services in West Virginia, Virginia and Kentucky. This Zacks Rank #1 (Strong Buy) stock has a market cap of $370.3 million and gained 21.1% over the past 12 months.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Last week, SMMF announced a quarterly cash dividend of 20 cents per share, representing a hike of 11.1% from the prior payout. The dividend will be paid out on Sep 30 to stockholders on record as of Sep 15.

Prior to this hike, the company announced a dividend hike of 5.9% in August 2021. The dividend was raised from 17 cents per share to 18 cents. In fact, Summit Financial increased its dividend six times in the last five years.

The stock has a dividend yield of 2.48% and a five-year annualized dividend growth of 10.8%. This is not only attractive to income investors but also represents a steady income stream.

Further, SMMF's payout ratio is 20% of earnings at present. Check Summit Financial’s dividend history here.

Summit Financial Group, Inc. Dividend Yield (TTM)

Summit Financial Group, Inc. Dividend Yield (TTM)
Summit Financial Group, Inc. Dividend Yield (TTM)

Summit Financial Group, Inc. dividend-yield-ttm | Summit Financial Group, Inc. Quote

Chico, CA-based TriCo Bancshares provides commercial banking services in 31 counties throughout California. Over the past year, the shares of this Zacks Rank #3 (Hold) company have rallied 19%. The company has a market cap of $1.6 billion.

Earlier this week, TCBK announced a dividend of 30 cents per share, marking a hike of 20% from the prior payout. The dividend will be paid out on Sep 23 to stockholders on record as of Sep 9.

Before the hike, the company announced a dividend hike of 13.6% in March 2021 to 25 cents per share. In the last five years, TriCo Bancshares raised its quarterly dividend four times.  

The stock has a dividend yield of 2.13% and a five-year annualized dividend growth of 10.5%. This is not only attractive to income investors but also represents a steady income stream.

Further, TCBK's payout ratio is 29% of earnings at present. Check TriCo Bancshares’ dividend history here.

TriCo Bancshares Dividend Yield (TTM)

TriCo Bancshares Dividend Yield (TTM)
TriCo Bancshares Dividend Yield (TTM)

TriCo Bancshares dividend-yield-ttm | TriCo Bancshares Quote

Stock Yards Bancorp, headquartered in Louisville, KY, offers various financial services to individuals, corporations and others in Louisville, Kentucky, Indiana and Ohio. Shares of this Zacks Rank #3 company have jumped 29.1% over the past year. SYBT has a market cap of $1.9 billion.

Earlier this month, Stock Yards Bancorp announced a dividend of 29 cents per share, representing a hike of 3.6% from the prior payout. The dividend will be paid out on Oct 3 to stockholders on record as of Sep 19.

Prior to this hike, SYBT increased its quarterly dividend by 3.7% to 28 cents per share in September 2021. Notably, the company increased its dividend seven times in the last five years.

The stock has a dividend yield of 1.68% and a five-year annualized dividend growth of 5.9%. Further, SYBT's payout ratio is 30% of earnings at present. Check Stock Yards Bancorp’s dividend history here.

Stock Yards Bancorp, Inc. Dividend Yield (TTM)

Stock Yards Bancorp, Inc. Dividend Yield (TTM)
Stock Yards Bancorp, Inc. Dividend Yield (TTM)

Stock Yards Bancorp, Inc. dividend-yield-ttm | Stock Yards Bancorp, Inc. Quote

Parting Thoughts

Investors prefer dividends (specifically when macroeconomic factors are turning dismal) for a number of reasons. These greatly improve stock investing profits, lower overall portfolio risk and carry tax advantages, among others.

But investors must be mindful that choosing stocks just based on higher yields is not a good idea. They must also take into account company fundamentals to find compelling investment opportunities.


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TriCo Bancshares (TCBK) : Free Stock Analysis Report
 
Stock Yards Bancorp, Inc. (SYBT) : Free Stock Analysis Report
 
Summit Financial Group, Inc. (SMMF) : Free Stock Analysis Report
 
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