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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. 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.
McGrath in Focus
Based in Livermore, McGrath (MGRC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 7.99%. Currently paying a dividend of $0.46 per share, the company has a dividend yield of 2.1%. In comparison, the Financial - Leasing Companies industry's yield is 1.05%, while the S&P 500's yield is 1.72%.
In terms of dividend growth, the company's current annualized dividend of $1.82 is up 5.5% from last year. McGrath has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.70%. 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, McGrath's payout ratio is 46%, which means it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MGRC for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.12 per share, representing a year-over-year earnings growth rate of 12.57%.
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. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that MGRC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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McGrath (MGRC) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
McGrath in Focus
Based in Livermore, McGrath (MGRC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 7.99%. Currently paying a dividend of $0.46 per share, the company has a dividend yield of 2.1%. In comparison, the Financial - Leasing Companies industry's yield is 1.05%, while the S&P 500's yield is 1.72%.
In terms of dividend growth, the company's current annualized dividend of $1.82 is up 5.5% from last year. McGrath has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.70%. 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, McGrath's payout ratio is 46%, which means it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for MGRC for this fiscal year. The Zacks Consensus Estimate for 2022 is $4.12 per share, representing a year-over-year earnings growth rate of 12.57%.
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. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that MGRC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).