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.
Mobile Mini in Focus
Based in Phoenix, Mobile Mini (MINI - Free Report) is in the Industrial Products sector, and so far this year, shares have seen a price change of -43.45%. The portable storage company is currently shelling out a dividend of $0.3 per share, with a dividend yield of 5.65%. This compares to the Containers - Metal and Glass industry's yield of 1.47% and the S&P 500's yield of 2.82%.
Looking at dividend growth, the company's current annualized dividend of $1.21 is up 10% from last year. In the past five-year period, Mobile Mini has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.73%. 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. Mobile Mini's current payout ratio is 54%. This means it paid out 54% of its trailing 12-month EPS as dividend.
MINI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $2.24 per share, with earnings expected to increase 10.89% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that MINI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).