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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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Janus Henderson Group plc in Focus
Based in London, Janus Henderson Group plc (JHG) is in the Finance sector, and so far this year, shares have seen a price change of 20.52%. The company is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 3.88% compared to the Financial - Investment Management industry's yield of 1.43% and the S&P 500's yield of 1.28%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 5.6% from last year. Over the last 5 years, Janus Henderson Group plc has increased its dividend 3 times on a year-over-year basis for an average annual increase of 11.12%. 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. Janus Henderson Group plc's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for JHG for this fiscal year. The Zacks Consensus Estimate for 2021 is $3.70 per share, which represents a year-over-year growth rate of 22.92%.
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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, JHG 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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