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Cincinnati Financial (CINF) is a Top Dividend Stock Right Now: Should You Buy?
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Cincinnati Financial in Focus
Based in Fairfield, Cincinnati Financial (CINF - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 40.46%. The insurer is currently shelling out a dividend of $0.63 per share, with a dividend yield of 2.05%. This compares to the Insurance - Property and Casualty industry's yield of 0.98% and the S&P 500's yield of 1.36%.
Looking at dividend growth, the company's current annualized dividend of $2.52 is up 5% from last year. In the past five-year period, Cincinnati Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.02%. 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. Cincinnati Financial's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CINF expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.82 per share, which represents a year-over-year growth rate of 46.95%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 have to be mindful 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 CINF 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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Cincinnati Financial (CINF) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Cincinnati Financial in Focus
Based in Fairfield, Cincinnati Financial (CINF - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 40.46%. The insurer is currently shelling out a dividend of $0.63 per share, with a dividend yield of 2.05%. This compares to the Insurance - Property and Casualty industry's yield of 0.98% and the S&P 500's yield of 1.36%.
Looking at dividend growth, the company's current annualized dividend of $2.52 is up 5% from last year. In the past five-year period, Cincinnati Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.02%. 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. Cincinnati Financial's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CINF expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.82 per share, which represents a year-over-year growth rate of 46.95%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 have to be mindful 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 CINF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).