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Robert Half (RHI) is a Top Dividend Stock Right Now: Should You Buy?

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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. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Robert Half in Focus

Based in Menlo Park, Robert Half (RHI - Free Report) is in the Business Services sector, and so far this year, shares have seen a price change of -2.64%. The staffing firm is currently shelling out a dividend of $0.31 per share, with a dividend yield of 2.23%. This compares to the Staffing Firms industry's yield of 1.26% and the S&P 500's yield of 2.03%.

In terms of dividend growth, the company's current annualized dividend of $1.24 is up 10.7% from last year. Over the last 5 years, Robert Half has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.49%. 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. Robert Half's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.

RHI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.98 per share, which represents a year-over-year growth rate of 10.25%.

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.

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, RHI 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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