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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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
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 32.21%. Currently paying a dividend of $0.38 per share, the company has a dividend yield of 3.54%. In comparison, the Financial - Investment Management industry's yield is 1.69%, while the S&P 500's yield is 1.41%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.52 is up 5.6% from last year. In the past five-year period, Janus Henderson Group plc has increased its dividend 2 times on a year-over-year basis for an average annual increase of 10.11%. 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. Right now, Janus Henderson Group plc's payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
JHG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $4.06 per share, representing a year-over-year earnings growth rate of 34.88%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that JHG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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