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Why Medifast (MED) is a Top Dividend Stock for Your Portfolio
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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Medifast in Focus
Headquartered in Baltimore, Medifast (MED - Free Report) is a Consumer Staples stock that has seen a price change of 44.79% so far this year. Currently paying a dividend of $1.42 per share, the company has a dividend yield of 2%. In comparison, the Food - Miscellaneous industry's yield is 0.11%, while the S&P 500's yield is 1.34%.
Taking a look at the company's dividend growth, its current annualized dividend of $5.68 is up 25.7% from last year. Medifast has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 45.55%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Medifast's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MED for this fiscal year. The Zacks Consensus Estimate for 2021 is $13.74 per share, which represents a year-over-year growth rate of 50.33%.
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. That said, they can take comfort from the fact that MED is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Why Medifast (MED) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Medifast in Focus
Headquartered in Baltimore, Medifast (MED - Free Report) is a Consumer Staples stock that has seen a price change of 44.79% so far this year. Currently paying a dividend of $1.42 per share, the company has a dividend yield of 2%. In comparison, the Food - Miscellaneous industry's yield is 0.11%, while the S&P 500's yield is 1.34%.
Taking a look at the company's dividend growth, its current annualized dividend of $5.68 is up 25.7% from last year. Medifast has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 45.55%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Medifast's current payout ratio is 53%. This means it paid out 53% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MED for this fiscal year. The Zacks Consensus Estimate for 2021 is $13.74 per share, which represents a year-over-year growth rate of 50.33%.
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. That said, they can take comfort from the fact that MED is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).