Are You Looking for a High-Growth Dividend Stock? Assurant (AIZ) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Assurant in Focus
Headquartered in New York, Assurant (AIZ) is a Finance stock that has seen a price change of -10.19% so far this year. Currently paying a dividend of $0.63 per share, the company has a dividend yield of 2.14%. In comparison, the Insurance - Multi line industry's yield is 2.58%, while the S&P 500's yield is 1.6%.
Looking at dividend growth, the company's current annualized dividend of $2.52 is up 3.7% from last year. In the past five-year period, Assurant has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.88%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Assurant's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AIZ expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $9.53 per share, which represents a year-over-year growth rate of 11.46%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 AIZ 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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