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FactSet Research (FDS) Could Be a Great Choice

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

FactSet Research (FDS - Free Report) is headquartered in Norwalk, and is in the Business Services sector. The stock has seen a price change of -24.39% since the start of the year. The financial data firm is paying out a dividend of $1.10 per share at the moment, with a dividend yield of 2.01% compared to the Business - Information Services industry's yield of 0.9% and the S&P 500's yield of 1.43%.

Looking at dividend growth, the company's current annualized dividend of $4.40 is up 2.8% from last year. Over the last 5 years, FactSet Research has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.04%. 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. FactSet's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for FDS for this fiscal year. The Zacks Consensus Estimate for 2026 is $17.65 per share, with earnings expected to increase 3.95% from the year ago period.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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, FDS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

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