Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Ryman Hospitality Properties in Focus
Headquartered in Nashville, Ryman Hospitality Properties (RHP - Free Report) is a Finance stock that has seen a price change of 20.63% so far this year. The hotel and resort real estate investment trust is currently shelling out a dividend of $0.9 per share, with a dividend yield of 4.47%. This compares to the REIT and Equity Trust - Other industry's yield of 4.21% and the S&P 500's yield of 1.96%.
Looking at dividend growth, the company's current annualized dividend of $3.60 is up 5.9% from last year. In the past five-year period, Ryman Hospitality Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.23%. 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. Right now, Ryman Hospitality Properties's payout ratio is 58%, which means it paid out 58% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RHP for this fiscal year. The Zacks Consensus Estimate for 2019 is $6.70 per share, which represents a year-over-year growth rate of 14.33%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, RHP 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).