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This is Why Medifast (MED) 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. But 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.
Medifast in Focus
Medifast (MED - Free Report) is headquartered in Baltimore, and is in the Consumer Staples sector. The stock has seen a price change of -15.47% since the start of the year. The weight-loss company is currently shelling out a dividend of $1.64 per share, with a dividend yield of 3.71%. This compares to the Food - Miscellaneous industry's yield of 0.24% and the S&P 500's yield of 1.73%.
Looking at dividend growth, the company's current annualized dividend of $6.56 is up 15.5% from last year. Over the last 5 years, Medifast has increased its dividend 5 times on a year-over-year basis for an average annual increase of 37.60%. 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. Right now, Medifast's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MED for this fiscal year. The Zacks Consensus Estimate for 2022 is $15.75 per share, with earnings expected to increase 13.39% from the year ago period.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MED 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 Medifast (MED) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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.
Medifast in Focus
Medifast (MED - Free Report) is headquartered in Baltimore, and is in the Consumer Staples sector. The stock has seen a price change of -15.47% since the start of the year. The weight-loss company is currently shelling out a dividend of $1.64 per share, with a dividend yield of 3.71%. This compares to the Food - Miscellaneous industry's yield of 0.24% and the S&P 500's yield of 1.73%.
Looking at dividend growth, the company's current annualized dividend of $6.56 is up 15.5% from last year. Over the last 5 years, Medifast has increased its dividend 5 times on a year-over-year basis for an average annual increase of 37.60%. 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. Right now, Medifast's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MED for this fiscal year. The Zacks Consensus Estimate for 2022 is $15.75 per share, with earnings expected to increase 13.39% from the year ago period.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, MED 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).