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This is Why Robert Half (RHI) is a Great Dividend Stock

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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. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Robert Half in Focus

Based in Menlo Park, Robert Half (RHI - Free Report) is in the Business Services sector, and so far this year, shares have seen a price change of -22.83%. Currently paying a dividend of $0.43 per share, the company has a dividend yield of 2%. In comparison, the Staffing Firms industry's yield is 1.07%, while the S&P 500's yield is 1.6%.

Looking at dividend growth, the company's current annualized dividend of $1.72 is up 13.2% from last year. Over the last 5 years, Robert Half has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.76%. 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. Robert Half's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, RHI expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $6.40 per share, representing a year-over-year earnings growth rate of 19.40%.

Bottom Line

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.

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, RHI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).


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