HTBK - Heritage Commerce: Dividend Yield And Capital Upside Supported By Rising Interest Rates

• High inflation followed by high interest rates will benefit banks’ interest income, positioning them for outperformance against other sectors in the present macroeconomic context.
• Among banks, HTBK will do especially well as it ranks very high in terms of its share of interest income-to-total revenue and has a large proportion of variable rate loans.
• Apart from earnings upside, HTBK is expected to provide a dividend yield of easily more than 4.4%.
• On top of the income from dividends, the dividend valuation model suggests capital gains upside of 24.7%.

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