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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
M.D.C. Holdings, Inc. In Focus
Based in Denver, M.D.C. Holdings, Inc. (MDC) is in the Construction sector, and so far this year, shares have seen a price change of 12.67%. The company is paying out a dividend of $0.4 per share at the moment, with a dividend yield of 3.16% compared to the Building Products - Home Builders industry's yield of 0.41% and the S&P 500's yield of 1.39%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 24.3% from last year. M.D.C. Holdings, Inc. has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 15.77%. 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. M.D.C. Holdings, Inc.'s current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.
MDC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $8.56 per share, which represents a year-over-year growth rate of 65.57%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer 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, MDC 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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M.D.C. Holdings, Inc. (MDC) : Free Stock Analysis Report
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