This regional bank is expected to grow by 22.6% this year. It has a current annual dividend yield of 3.85%, paid quarterly.
Heritage Commerce Corp (HTBK)
From Forbes Dividend Investor
Banks traditionally borrow short-term funds and lend them out at long-term for homes, cars, and college. That business model works like a charm as long as short-term rates are lower than long-term rates, but that was not the case earlier this year when long-term bonds had yields below shorter-term notes. With longer-term rates rising again and the Fed cutting short-term rates, the yield curve has steepened, which has been welcome news for banks. The KBF Regional Bank (KRE) ETF is up nearly 15% since early September.
San Jose, Calif.-based Heritage Commerce Corp (HTBK) is a small-cap regional bank holding company that owns the Heritage Bank of Commerce, which has branches throughout Silicon Valley in cities including Palo Alto, Sunnyvale, Pleasanton, Redwood City, San Francisco, San Jose, and Walnut Creek. It also owns Bay View Funding which provides working capital factoring financing throughout the United States.
Net interest income is expected to grow 8.3% this year, with earnings per share rising 13% to $0.95 per share, giving Heritage a price-earnings ratio of 13. The stock has traded for an average of 20.7 times trailing 12-months of earnings over the past five years, and 14.6 times forward earnings. The $0.48 in annual dividends is well below $1.12 in free cash flow per share over the past 12 months.
Insiders have been bullish on HBTK recently, with three members of the board of directors making significant purchases at prices just below where the stock currently trades at $12.33 per share.
John Dobosz, Forbes Dividend Investor, www.newsletters.forbes.com, 212-367-3388, November 8, 2019