Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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 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
Headquartered in Nashville, Ryman Hospitality Properties (RHP - Free Report) is a Finance stock that has seen a price change of 10.81% so far this year. Currently paying a dividend of $0.9 per share, the company has a dividend yield of 4.87%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.29%, while the S&P 500's yield is 1.89%.
Taking a look at the company's dividend growth, its 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 9.49%. 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. Ryman Hospitality Properties's current payout ratio is 58%. This means it paid out 58% of its trailing 12-month EPS as dividend.
RHP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $6.71 per share, with earnings expected to increase 14.51% 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. But, not every company offers 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, RHP 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).