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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Prudential in Focus
Headquartered in Newark, Prudential (PRU - Free Report) is a Finance stock that has seen a price change of 2.08% so far this year. The financial services company is currently shelling out a dividend of $2.45 per share, with a dividend yield of 4.92%. This compares to the Insurance - Multi line industry's yield of 1.92% and the S&P 500's yield of 1.58%.
In terms of dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. In the past five-year period, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.12%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Prudential's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRU expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $12.04 per share, with earnings expected to increase 27.27% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PRU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Prudential (PRU) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Prudential in Focus
Headquartered in Newark, Prudential (PRU - Free Report) is a Finance stock that has seen a price change of 2.08% so far this year. The financial services company is currently shelling out a dividend of $2.45 per share, with a dividend yield of 4.92%. This compares to the Insurance - Multi line industry's yield of 1.92% and the S&P 500's yield of 1.58%.
In terms of dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. In the past five-year period, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.12%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Prudential's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRU expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $12.04 per share, with earnings expected to increase 27.27% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PRU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).