Grab State Street Corporation (NYSE:STT) Today With A Solid 4.0% Dividend Yield
Over the past 10 years State Street Corporation (NYSE:STT) has grown its dividend payouts from $0.96 to $2.08. With a market cap of US$20b, State Street pays out 34% of its earnings, leading to a 4.0% yield. Let me elaborate on you why the stock stands out for income investors like myself.
Check out our latest analysis for State Street
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:
Its annual yield is among the top 25% of dividend payers
It has paid dividend every year without dramatically reducing payout in the past
Its has increased its dividend per share amount over the past
It is able to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
State Street's yield sits at 4.0%, which is high for Capital Markets stocks. But the real reason State Street stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
Reliability is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. STT has increased its DPS from $0.96 to $2.08 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes STT a true dividend rockstar.
The current trailing twelve-month payout ratio for the stock is 34%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect STT's payout to remain around the same level at 35% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.0%. Furthermore, EPS should increase to $5.96.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Next Steps:
State Street's strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three relevant factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for STT’s future growth? Take a look at our free research report of analyst consensus for STT’s outlook.
Valuation: What is STT worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether STT is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
