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This is Why ManpowerGroup (MAN) is a Great Dividend Stock

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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

ManpowerGroup in Focus

Headquartered in Milwaukee, ManpowerGroup (MAN - Free Report) is a Business Services stock that has seen a price change of -11.63% so far this year. The staffing company is currently shelling out a dividend of $1.36 per share, with a dividend yield of 3.16%. This compares to the Staffing Firms industry's yield of 1.51% and the S&P 500's yield of 1.55%.

In terms of dividend growth, the company's current annualized dividend of $2.72 is up 7.9% from last year. ManpowerGroup has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.26%. 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. Right now, Manpower's payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for MAN for this fiscal year. The Zacks Consensus Estimate for 2022 is $9.08 per share, representing a year-over-year earnings growth rate of 25.41%.

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. However, not all companies offer a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MAN 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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