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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Federated Investors in Focus
Headquartered in Pittsburgh, Federated Investors is a Finance stock that has seen a price change of 16.12% so far this year. The one of the nation's largest managers of money market funds is currently shelling out a dividend of $0.27 per share, with a dividend yield of 3.5%. This compares to the Financial - Investment Management industry's yield of 2.95% and the S&P 500's yield of 1.89%.
Looking at dividend growth, the company's current annualized dividend of $1.08 is up 1.9% from last year. Federated Investors has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 1.49%. 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. Federated Investors's current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FII expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $2.49 per share, which represents a year-over-year growth rate of 14.22%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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 FII 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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Federated Investors (FII) is a Top Dividend Stock Right Now: Should You Buy?
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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Federated Investors in Focus
Headquartered in Pittsburgh, Federated Investors is a Finance stock that has seen a price change of 16.12% so far this year. The one of the nation's largest managers of money market funds is currently shelling out a dividend of $0.27 per share, with a dividend yield of 3.5%. This compares to the Financial - Investment Management industry's yield of 2.95% and the S&P 500's yield of 1.89%.
Looking at dividend growth, the company's current annualized dividend of $1.08 is up 1.9% from last year. Federated Investors has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 1.49%. 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. Federated Investors's current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FII expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $2.49 per share, which represents a year-over-year growth rate of 14.22%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. 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 FII is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).