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This is Why Carlyle Group (CG) is a Great Dividend Stock

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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Carlyle Group in Focus

Carlyle Group (CG - Free Report) is headquartered in Washington, and is in the Finance sector. The stock has seen a price change of 15.29% since the start of the year. The asset management firm is paying out a dividend of $0.35 per share at the moment, with a dividend yield of 2.98% compared to the Financial - Investment Funds industry's yield of 4.04% and the S&P 500's yield of 1.54%.

Looking at dividend growth, the company's current annualized dividend of $1.40 is up 1.8% from last year. In the past five-year period, Carlyle Group has increased its dividend 2 times on a year-over-year basis for an average annual increase of 3.39%. 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. Carlyle's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for CG for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.88 per share, with earnings expected to increase 19.75% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CG 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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