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 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
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 23.75%. 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 4.36% compared to the REIT and Equity Trust - Other industry's yield of 4.07% and the S&P 500's yield of 1.89%.
Looking at dividend growth, the company's current annualized dividend of $3.60 is up 5.9% from last year. Over the last 5 years, Ryman Hospitality Properties has increased its dividend 5 times on a year-over-year basis 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 56%, meaning it paid out 56% 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 $6.79 per share, representing a year-over-year earnings growth rate of 15.87%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. 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).