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4 Stocks That Should Be in a Dividend Investor's Portfolio

Returns from investing in shares can primarily be reaped in two ways, capital appreciation and dividends. Let’s focus on and understand how regular dividends are beneficial for an investor and a company.

Here’s What Dividends Mean to Investors

Dividends create a reliable source of return without having to sell the shares. The payment of dividends is more dependable than capital appreciation on shares. With the incorporation of dividend-paying stocks in their portfolio, one can expect returns even in a volatile market.  Investors also get a tax advantage from dividends, making it more attractive.

Dividend stocks are a lucrative option for investors looking for regular returns without having to wait for the shares to move up. Dividend investors target companies with a consistent dividend payment history and steady growth.

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Interpublic Group IPG, Omnicom Group OMC, Robert Half RHI and Western Union WU are some of the dividend-paying companies from the broader Zacks Business Services sector. While IPG and OMC carry a Zacks Rank #2 (Buy), RHI and WU have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

How Does a Dividend-Paying Company Benefit?

A regular dividend-paying company is expected to have higher investor loyalty compared to a company not paying dividends. A company with a dividend-paying history is likely to recover faster after a major correction in the market compared to its non-dividend-paying peers.

Factors to Consider While Picking Dividend Stocks

Dividend-paying stocks are rewarding but a rational investor should always make an informed decision. Some of the aspects that need to be considered while selecting stocks that will accomplish your dividend investing goals include its payout ratio, payment history, yield, and revenue and earnings growth

The payout ratio indicates how much a company is distributing as dividend from its earnings per share. A low payout indicates sustainable dividend payment. Consistent dividend payment, especially during tough times, is expected to grab investor attention. Yield is the annualized dividend as a percentage of the stock price. Selecting dividend payers with a track record of steady revenue and earnings growth and high yield ensures returns over the long term.

Our Dividend Picks

We ran the Zacks Stocks Screener to identify the abovementioned stocks with a dividend yield in excess of 2% and five-year historical dividend growth of more than 0.1%. These stocks have a dividend payout ratio of less than 60%.

The Zacks Consensus Estimate for Interpublic Group’s 2023 earnings indicates 7.65% year-over-year growth. The company will pay out a dividend of 31 cents on Jun 20. It has a payout ratio of 47%. The company’s annualized dividend comes at $1.24 a share, currently yielding 3.3%. It has an annualized five-year dividend growth of 8%. (Check Interpublic’s dividend history here)

Interpublic Group of Companies, Inc. (The) Dividend Yield (TTM)

Interpublic Group of Companies, Inc. (The) Dividend Yield (TTM)
Interpublic Group of Companies, Inc. (The) Dividend Yield (TTM)

Interpublic Group of Companies, Inc. (The) dividend-yield-ttm | Interpublic Group of Companies, Inc. (The) Quote

The Zacks Consensus Estimate for Omnicom’s earnings indicates growth of 6.9% while the same for revenue indicates 3% growth. Omnicom has a five-year annualized dividend growth rate of 3.5%. The company will pay out a dividend of 70 cents on Jun 8. Its annualized dividend of $2.8 a share currently yields 3.1% with the payout ratio being 39%. (Check Omnicom's dividend history here)

Omnicom Group Inc. Dividend Yield (TTM)

Omnicom Group Inc. Dividend Yield (TTM)
Omnicom Group Inc. Dividend Yield (TTM)

Omnicom Group Inc. dividend-yield-ttm | Omnicom Group Inc. Quote

Robert Half has been a regular dividend payer, having increased its dividend five times in the last five years. The annualized dividend growth rate is 11.4%. The company pays out 34% of its earnings.  The Zacks Consensus Estimate for 2023 earnings is currently pegged at $4.29 per share. The company will pay out 48 cents on Jun 15 as dividend. Its annualized dividend of $1.92 a share currently yields 2.8%. (Check Robert Half’s dividend history here)

Robert Half International Inc. Dividend Yield (TTM)

Robert Half International Inc. Dividend Yield (TTM)
Robert Half International Inc. Dividend Yield (TTM)

Robert Half International Inc. dividend-yield-ttm | Robert Half International Inc. Quote

Western Union will pay out 24 cents as dividend on Jun 30. It has increased its dividend thrice in the past five years and has an annualized dividend growth of 5.5%. The company’s annualized dividend comes to 94 cents, yielding 8% on a share. It has a payout ratio of 56%. Additionally, the Zacks Consensus Estimate for full-year earnings of the company is pegged at $1.61, which has been revised northward by 1.3% in the past 60 days. (Check Western Union's dividend history here)

The Western Union Company Dividend Yield (TTM)

The Western Union Company Dividend Yield (TTM)
The Western Union Company Dividend Yield (TTM)

The Western Union Company dividend-yield-ttm | The Western Union Company Quote

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Omnicom Group Inc. (OMC) : Free Stock Analysis Report

Interpublic Group of Companies, Inc. (The) (IPG) : Free Stock Analysis Report

The Western Union Company (WU) : Free Stock Analysis Report

Robert Half International Inc. (RHI) : Free Stock Analysis Report

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Zacks Investment Research