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Assurant (AIZ) is a Top Dividend Stock Right Now: Should You Buy?

Zacks Equity Research

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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Assurant in Focus

Assurant (AIZ) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -5.25% since the start of the year. The insurer is currently shelling out a dividend of $0.63 per share, with a dividend yield of 2.03%. This compares to the Insurance - Multi line industry's yield of 2.53% and the S&P 500's yield of 1.71%.

Looking at dividend growth, the company's current annualized dividend of $2.52 is up 3.7% from last year. Assurant has increased its dividend 5 times on a year-over-year basis over the last 5 years 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.

AIZ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $9.53 per share, representing a year-over-year earnings 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.

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, AIZ presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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