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Why McGrath (MGRC) is a Top Dividend Stock for Your Portfolio
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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 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 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
Headquartered in Livermore, McGrath (MGRC - Free Report) is a Finance stock that has seen a price change of -8.4% so far this year. The business-to-business rental company is currently shelling out a dividend of $0.47 per share, with a dividend yield of 2.06%. This compares to the Financial - Leasing Companies industry's yield of 2.06% and the S&P 500's yield of 1.74%.
In terms of dividend growth, the company's current annualized dividend of $1.86 is up 3.3% from last year. Over the last 5 years, McGrath has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.29%. 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, McGrath's payout ratio is 41%, which means it paid out 41% of its trailing 12-month EPS as dividend.
MGRC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.72 per share, with earnings expected to increase 0.43% 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.
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. 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 #1 (Strong Buy).
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Why McGrath (MGRC) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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
Headquartered in Livermore, McGrath (MGRC - Free Report) is a Finance stock that has seen a price change of -8.4% so far this year. The business-to-business rental company is currently shelling out a dividend of $0.47 per share, with a dividend yield of 2.06%. This compares to the Financial - Leasing Companies industry's yield of 2.06% and the S&P 500's yield of 1.74%.
In terms of dividend growth, the company's current annualized dividend of $1.86 is up 3.3% from last year. Over the last 5 years, McGrath has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.29%. 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, McGrath's payout ratio is 41%, which means it paid out 41% of its trailing 12-month EPS as dividend.
MGRC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.72 per share, with earnings expected to increase 0.43% 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.
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. 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 #1 (Strong Buy).