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Are You Looking for a High-Growth Dividend Stock? Assurant (AIZ) Could Be a Great Choice

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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Assurant in Focus

Assurant (AIZ - Free Report) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -30.49% since the start of the year. The insurer is paying out a dividend of $0.63 per share at the moment, with a dividend yield of 2.77% compared to the Insurance - Multi line industry's yield of 3.17% and the S&P 500's yield of 2.21%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.52 is up 3.7% from last year. In the past five-year period, Assurant has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.55%. 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. Assurant's current payout ratio is 28%. This means it paid out 28% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, AIZ expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $9.30 per share, which represents a year-over-year growth rate of 8.77%.

Bottom Line

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.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious 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 AIZ is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).


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