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This is Why American Homes 4 Rent (AMH) 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. 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 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.
American Homes 4 Rent in Focus
Headquartered in Calabasas, American Homes 4 Rent (AMH - Free Report) is a Finance stock that has seen a price change of -17.52% so far this year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2%. In comparison, the REIT and Equity Trust - Residential industry's yield is 2.95%, while the S&P 500's yield is 1.71%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 80% from last year. Over the last 5 years, American Homes 4 Rent has increased its dividend 2 times on a year-over-year basis for an average annual increase of 26.97%. 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. Right now, American Homes 4 Rent's payout ratio is 50%, which means it paid out 50% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AMH for this fiscal year. The Zacks Consensus Estimate for 2022 is $1.56 per share, which represents a year-over-year growth rate of 14.71%.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AMH presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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This is Why American Homes 4 Rent (AMH) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
American Homes 4 Rent in Focus
Headquartered in Calabasas, American Homes 4 Rent (AMH - Free Report) is a Finance stock that has seen a price change of -17.52% so far this year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2%. In comparison, the REIT and Equity Trust - Residential industry's yield is 2.95%, while the S&P 500's yield is 1.71%.
Looking at dividend growth, the company's current annualized dividend of $0.72 is up 80% from last year. Over the last 5 years, American Homes 4 Rent has increased its dividend 2 times on a year-over-year basis for an average annual increase of 26.97%. 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. Right now, American Homes 4 Rent's payout ratio is 50%, which means it paid out 50% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AMH for this fiscal year. The Zacks Consensus Estimate for 2022 is $1.56 per share, which represents a year-over-year growth rate of 14.71%.
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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AMH presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).