2 Financial Companies Continue Dividend Boosts, Offer 3.6%-Plus Yields
By: NED PIPLOVIC
Two financial companies have been rewarding their shareholders with dividend boosts for nearly a decade and currently pay 3.6%-plus dividend yields.
Moderate asset appreciation accompanied the steady increase in annual dividend income for both companies. While Main Street Capital Corporation (NYSE:MAIN) had a 47% total return over the past three years, Isabella Bank Corporation (OTCBB:ISBA) had a total return of 33% over the same three-year period.
As indicated in the table below, Main Street Capital will pay its dividend in mid-October, which is about three-and-a-half weeks after its ex-dividend date of September 20, 2017. Isabella Bank’s pay date of September 29, 2017, is only three days after its ex-dividend date of September 26, 2017.
Main Street Capital Corporation (NYSE:MAIN)
Main Street Capital Corporation is a business development company that specializes in long-term equity and debt investments. The firm invests in subordinated loans, private equity, venture debt, mezzanine investments, management buyouts, change of control transactions, ownership transitions, recapitalizations, strategic acquisitions, refinancing and business expansion capital. Additionally, the company invests in consumer staples, energy, health care, industrials, information technology, materials, telecommunication services and utilities sectors. Main Street Capital seeks to invest in traditional or basic businesses and avoids investing in start-up companies or companies with speculative business plans. While the company considers all domestic investment opportunities, most of the company’s investment allocation is in public companies based in the southern, south central and southwestern regions of the United States. Founded in 1997, Main Street Capital Corporation is based at Houston.
The current monthly dividend payout of $0.19 is 2.7% higher than the previous month’s $0.185 distribution and converts to a $2.28 annual payout, which yields 5.8%. Since 2007, when Main Street Capital started paying a dividend, the company failed to boost its annual dividend only once. In 2010, the company paid the same $1.50 annual dividend as the year before. Over the past seven consecutive years, the company rewarded its investors with 12 dividend boosts. During the current streak of dividend boosts, MAIN hiked its payout at an average rate of 8.1% per year.
The stock price rose almost 19% between mid-September 2016 and its 52-week high of $40.86 on May 1, 2017. Since its May peak, the share price fell 2.2%. However, the closing price on September 13, 2017, is 16.1% higher than one year ago and 35% higher than it was five years ago.
Isabella Bank Corp (OTCBB:ISBA)
Founded in 1903 and headquartered in Mount Pleasant, Michigan, Isabella Bank Corporation operates as the bank holding company for Isabella Bank, which provides banking services to businesses, institutions and individuals in Michigan. The bank offers interest and noninterest bearing checking accounts, savings accounts, money market accounts, direct deposits and certificates of deposit.
Additionally, the company’s loan portfolio comprises commercial loans, agricultural loans and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. In addition to the traditional banking services, Isabella Bank provides mobile and internet banking, electronic bill pay and automated teller machines. ISBA also offers investment brokerage, safe deposit box rental services and numerous types of insurance, such as group life, health, accident and disability insurance. As of August 2017, the company operated 29 banking offices located throughout Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm and Saginaw counties in Michigan.
The bank’s lates in series of dividend boosts enhanced the quaterly dividend by 4% from $0.25 in the previous quarter to the current quarter’s $0.26 payout. The annualized current dividend of $1.04 is equivalent to a 3.6% yield. Since starting to trade under its current “ISBA” symbol in 2008, the company hiked its annual dividend distribution every year. Over the past nine years, the annual dividend distribution rose at an average rate of 10.9% per year, which resulted in a 154% total dividend increase over that time. Prior to 2008, the company traded under the symbol “IBTM.” If that period is added to the current dividend streak, the company has boosted its annual dividend for the past 34 consecutive years.
The share price traded relatively flat around the $28.00 level since September 2016. On August 8, 2017, the share price closed at $27.70, which is the exact same price that it was almost a year ago on September 15, 2016. However, since August 8, 2017, the share price rose 4.7% and reached a new 52-week high of $29.00 as of closing on September 13, 2017.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.