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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 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.
Prudential in Focus
Prudential (PRU - Free Report) is headquartered in Newark, and is in the Finance sector. The stock has seen a price change of -19.05% since the start of the year. Currently paying a dividend of $1.25 per share, the company has a dividend yield of 6.21%. In comparison, the Insurance - Multi line industry's yield is 2.14%, while the S&P 500's yield is 1.76%.
In terms of dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. In the past five-year period, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.97%. 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. Prudential's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRU expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $12.03 per share, representing a year-over-year earnings growth rate of 27.17%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PRU 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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Prudential (PRU) Could Be a Great Choice
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 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.
Prudential in Focus
Prudential (PRU - Free Report) is headquartered in Newark, and is in the Finance sector. The stock has seen a price change of -19.05% since the start of the year. Currently paying a dividend of $1.25 per share, the company has a dividend yield of 6.21%. In comparison, the Insurance - Multi line industry's yield is 2.14%, while the S&P 500's yield is 1.76%.
In terms of dividend growth, the company's current annualized dividend of $5 is up 4.2% from last year. In the past five-year period, Prudential has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.97%. 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. Prudential's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PRU expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $12.03 per share, representing a year-over-year earnings growth rate of 27.17%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PRU 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).