Greif (GEF) is a Top Dividend Stock Right Now: Should You Buy?

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 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.

Greif in Focus

Greif (GEF) is headquartered in Delaware, and is in the Industrial Products sector. The stock has seen a price change of 16.33% since the start of the year. The industrial packaging company is paying out a dividend of $0.44 per share at the moment, with a dividend yield of 4.08% compared to the Containers - Paper and Packaging industry's yield of 2.68% and the S&P 500's yield of 1.82%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.76 is up 3.5% from last year. In the past five-year period, Greif has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.90%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Greif's current payout ratio is 46%, meaning it paid out 46% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for GEF for this fiscal year. The Zacks Consensus Estimate for 2019 is $4.02 per share, representing a year-over-year earnings growth rate of 1.52%.

Bottom Line

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.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, GEF 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).

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