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State Street Corporation (STT) Could Be a Great Choice
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
State Street Corporation in Focus
Headquartered in Boston, State Street Corporation (STT - Free Report) is a Finance stock that has seen a price change of 12.19% so far this year. The company is currently shelling out a dividend of $0.63 per share, with a dividend yield of 2.9%. This compares to the Banks - Major Regional industry's yield of 3.21% and the S&P 500's yield of 1.63%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.52 is up 5% from last year. In the past five-year period, State Street Corporation has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.44%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. State Street Corporation's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, STT expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $8.44 per share, which represents a year-over-year growth rate of 13.90%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that STT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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State Street Corporation (STT) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
State Street Corporation in Focus
Headquartered in Boston, State Street Corporation (STT - Free Report) is a Finance stock that has seen a price change of 12.19% so far this year. The company is currently shelling out a dividend of $0.63 per share, with a dividend yield of 2.9%. This compares to the Banks - Major Regional industry's yield of 3.21% and the S&P 500's yield of 1.63%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.52 is up 5% from last year. In the past five-year period, State Street Corporation has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.44%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. State Street Corporation's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, STT expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $8.44 per share, which represents a year-over-year growth rate of 13.90%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that STT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).