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 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.
Ryman Hospitality Properties in Focus
Based in Nashville, Ryman Hospitality Properties (RHP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 21.59%. The hotel and resort real estate investment trust is paying out a dividend of $0.9 per share at the moment, with a dividend yield of 4.44% compared to the REIT and Equity Trust - Other industry's yield of 4.19% and the S&P 500's yield of 1.91%.
Looking at dividend growth, the company's current annualized dividend of $3.60 is up 5.9% from last year. Ryman Hospitality Properties has increased its dividend 5 times on a year-over-year basis over the last 5 years 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. Ryman Hospitality Properties's current payout ratio is 58%. This means it paid out 58% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, RHP expects solid earnings growth. 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. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).