Back to top

Image: Bigstock

BlackRock (BLK) is a Top Dividend Stock Right Now: Should You Buy?

Read MoreHide Full Article

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

BlackRock in Focus

Headquartered in New York, BlackRock (BLK - Free Report) is a Finance stock that has seen a price change of 13.5% so far this year. The investment firm is paying out a dividend of $3.3 per share at the moment, with a dividend yield of 2.96% compared to the Financial - Investment Management industry's yield of 2.88% and the S&P 500's yield of 1.96%.

In terms of dividend growth, the company's current annualized dividend of $13.20 is up 9.8% from last year. Over the last 5 years, BlackRock has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.18%. 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. BlackRock's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, BLK expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $27.78 per share, with earnings expected to increase 3.16% 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. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BLK presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


BlackRock, Inc. (BLK) - free report >>

Published in