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Robert Half (RHI) is a Top Dividend Stock Right Now: Should You Buy?

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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 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.

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 -27.75%. The staffing firm is paying out a dividend of $0.43 per share at the moment, with a dividend yield of 2.13% compared to the Staffing Firms industry's yield of 1.49% and the S&P 500's yield of 1.66%.

In terms of dividend growth, the company's current annualized dividend of $1.72 is up 13.2% from last year. In the past five-year period, Robert Half has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.76%. Future dividend growth will depend on earnings growth as well as 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.

Earnings growth looks solid for RHI for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.40 per share, which represents a year-over-year growth rate of 19.40%.

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. 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. 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, 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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