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.
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.
Silvercrest in Focus
Based in New York, Silvercrest (SAMG) is in the Finance sector, and so far this year, shares have seen a price change of -14.47%. Currently paying a dividend of $0.16 per share, the company has a dividend yield of 5.95%. In comparison, the Financial - Investment Management industry's yield is 1.75%, while the S&P 500's yield is 1.72%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 6.7% from last year. Silvercrest has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.75%. 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. Silvercrest's current payout ratio is 48%, meaning it paid out 48% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, SAMG expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $1.34 per share, representing a year-over-year earnings growth rate of 14.53%.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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 have to be mindful 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 SAMG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Silvercrest Asset Management Group Inc. (SAMG) : Free Stock Analysis Report
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