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Why Travelers (TRV) 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. 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.
Travelers in Focus
Headquartered in New York, Travelers (TRV - Free Report) is a Finance stock that has seen a price change of -2.5% so far this year. The insurer is paying out a dividend of $0.93 per share at the moment, with a dividend yield of 2.03% compared to the Insurance - Property and Casualty industry's yield of 0.68% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.72 is up 1.4% from last year. In the past five-year period, Travelers has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.41%. 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. Right now, Travelers's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TRV for this fiscal year. The Zacks Consensus Estimate for 2023 is $14.31 per share, which represents a year-over-year growth rate of 15.22%.
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, TRV 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 Travelers (TRV) 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. 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.
Travelers in Focus
Headquartered in New York, Travelers (TRV - Free Report) is a Finance stock that has seen a price change of -2.5% so far this year. The insurer is paying out a dividend of $0.93 per share at the moment, with a dividend yield of 2.03% compared to the Insurance - Property and Casualty industry's yield of 0.68% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.72 is up 1.4% from last year. In the past five-year period, Travelers has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.41%. 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. Right now, Travelers's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TRV for this fiscal year. The Zacks Consensus Estimate for 2023 is $14.31 per share, which represents a year-over-year growth rate of 15.22%.
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, TRV 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).