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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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Reinsurance Group in Focus
Headquartered in Chesterfield, Reinsurance Group (RGA - Free Report) is a Finance stock that has seen a price change of 1.53% so far this year. Currently paying a dividend of $0.8 per share, the company has a dividend yield of 2.22%. In comparison, the Insurance - Life Insurance industry's yield is 0.07%, while the S&P 500's yield is 1.72%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.20 is up 4.6% from last year. In the past five-year period, Reinsurance Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.33%. 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, Reinsurance Group's payout ratio is 17%, which means it paid out 17% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RGA for this fiscal year. The Zacks Consensus Estimate for 2023 is $17.77 per share, representing a year-over-year earnings growth rate of 23.15%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that RGA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Reinsurance Group (RGA) 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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
Reinsurance Group in Focus
Headquartered in Chesterfield, Reinsurance Group (RGA - Free Report) is a Finance stock that has seen a price change of 1.53% so far this year. Currently paying a dividend of $0.8 per share, the company has a dividend yield of 2.22%. In comparison, the Insurance - Life Insurance industry's yield is 0.07%, while the S&P 500's yield is 1.72%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.20 is up 4.6% from last year. In the past five-year period, Reinsurance Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.33%. 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, Reinsurance Group's payout ratio is 17%, which means it paid out 17% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RGA for this fiscal year. The Zacks Consensus Estimate for 2023 is $17.77 per share, representing a year-over-year earnings growth rate of 23.15%.
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.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that RGA is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).