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Griffon (GFF) 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. 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.
Griffon in Focus
Based in New York, Griffon (GFF - Free Report) is in the Conglomerates sector, and so far this year, shares have seen a price change of -37.68%. Currently paying a dividend of $0.09 per share, the company has a dividend yield of 2.03%. In comparison, the Diversified Operations industry's yield is 0.36%, while the S&P 500's yield is 1.5%.
In terms of dividend growth, the company's current annualized dividend of $0.36 is up 12.5% from last year. Griffon has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.70%. 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. Griffon's current payout ratio is 22%. This means it paid out 22% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for GFF for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.05 per share, representing a year-over-year earnings growth rate of 20.59%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, GFF 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).