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Why American Homes 4 Rent (AMH) is a Great Dividend Stock Right Now
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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 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.
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 -24.77% so far this year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2.19%. In comparison, the REIT and Equity Trust - Residential industry's yield is 3.28%, while the S&P 500's yield is 1.87%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 80% from last year. American Homes 4 Rent has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 26.97%. 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. American Homes 4 Rent's current payout ratio is 0%. This means it paid out 0% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMH expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.56 per share, representing a year-over-year earnings growth rate of 14.71%.
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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AMH 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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Why American Homes 4 Rent (AMH) is a Great Dividend Stock Right Now
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 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.
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 -24.77% so far this year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 2.19%. In comparison, the REIT and Equity Trust - Residential industry's yield is 3.28%, while the S&P 500's yield is 1.87%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 80% from last year. American Homes 4 Rent has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 26.97%. 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. American Homes 4 Rent's current payout ratio is 0%. This means it paid out 0% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMH expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $1.56 per share, representing a year-over-year earnings growth rate of 14.71%.
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. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AMH 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).