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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.
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.
Headquartered in Milwaukee, MGIC Investment (MTG - Free Report) is a Finance stock that has seen a price change of 13.71% so far this year. The mortgage insurance company is currently shelling out a dividend of $0.15 per share, with a dividend yield of 2.23%. This compares to the Insurance - Multi line industry's yield of 1.71% and the S&P 500's yield of 1.51%.
Looking at dividend growth, the company's current annualized dividend of $0.60 is up 22.4% from last year. Over the last 5 years, MGIC Investment has increased its dividend 4 times on a year-over-year basis for an average annual increase of 20.17%. 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. MGIC's current payout ratio is 17%, meaning it paid out 17% of its trailing 12-month EPS as dividend.
MTG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.01 per share, representing a year-over-year earnings growth rate of 3.44%.
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. That said, they can take comfort from the fact that MTG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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MGIC Investment (MTG) 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. But 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.
Headquartered in Milwaukee, MGIC Investment (MTG - Free Report) is a Finance stock that has seen a price change of 13.71% so far this year. The mortgage insurance company is currently shelling out a dividend of $0.15 per share, with a dividend yield of 2.23%. This compares to the Insurance - Multi line industry's yield of 1.71% and the S&P 500's yield of 1.51%.
Looking at dividend growth, the company's current annualized dividend of $0.60 is up 22.4% from last year. Over the last 5 years, MGIC Investment has increased its dividend 4 times on a year-over-year basis for an average annual increase of 20.17%. 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. MGIC's current payout ratio is 17%, meaning it paid out 17% of its trailing 12-month EPS as dividend.
MTG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.01 per share, representing a year-over-year earnings growth rate of 3.44%.
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. That said, they can take comfort from the fact that MTG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).