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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 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.
Gatx in Focus
Gatx (GATX - Free Report) is headquartered in Chicago, and is in the Transportation sector. The stock has seen a price change of 1.92% since the start of the year. The equipment finance company is paying out a dividend of $0.55 per share at the moment, with a dividend yield of 2.03% compared to the Transportation - Equipment and Leasing industry's yield of 2.02% and the S&P 500's yield of 1.76%.
Looking at dividend growth, the company's current annualized dividend of $2.20 is up 5.8% from last year. Gatx has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.36%. 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. Gatx's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GATX expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $6.71 per share, which represents a year-over-year growth rate of 10.54%.
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. However, not all companies offer 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, GATX 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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Gatx (GATX) 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. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Gatx in Focus
Gatx (GATX - Free Report) is headquartered in Chicago, and is in the Transportation sector. The stock has seen a price change of 1.92% since the start of the year. The equipment finance company is paying out a dividend of $0.55 per share at the moment, with a dividend yield of 2.03% compared to the Transportation - Equipment and Leasing industry's yield of 2.02% and the S&P 500's yield of 1.76%.
Looking at dividend growth, the company's current annualized dividend of $2.20 is up 5.8% from last year. Gatx has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.36%. 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. Gatx's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GATX expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $6.71 per share, which represents a year-over-year growth rate of 10.54%.
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. However, not all companies offer 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, GATX 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).