Yahoo Finance Are You Looking for a High-Growth Dividend Stock?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Cincinnati Financial in Focus
Based in Fairfield, Cincinnati Financial (CINF) is in the Finance sector, and so far this year, shares have seen a price change of 15.94%. The insurer is currently shelling out a dividend of $0.81 per share, with a dividend yield of 2.7%. This compares to the Insurance - Property and Casualty industry's yield of 0.2% and the S&P 500's yield of 1.61%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.24 is up 8% from last year. Cincinnati Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 7.71%. 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. Cincinnati Financial's current payout ratio is 50%. This means it paid out 50% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CINF for this fiscal year. The Zacks Consensus Estimate for 2024 is $6.33 per share, with earnings expected to increase 4.98% from the year ago period.
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.
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 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 CINF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
