Top Picks 2020: Heritage Commerce Corp. (HTBK)

01/15/2020 5:00 am EST

Focus: FINANCIALS

John Dobosz

Editor, Forbes Premium Income Report and Forbes Dividend Investor

San Jose, Calif.-based Heritage Commerce Corp. (HTBK) is a small-cap regional bank holding company; the bank has a market cap of $758 million and offers a dividend yield of 3.8%, explains John Dobosz, editor of Forbes Dividend Investor.

The bank 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 company pays $0.48 in annual dividends, well below $1.12 in free cash flow per share generated over the past 12 months.

Insiders have been bullish on HBTK, with three members of the board of directors making significant purchases at prices just below where the stock currently trades.

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