Hamilton Lane (HLNE) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Hamilton Lane in Focus
Headquartered in Conshohocken, Hamilton Lane (HLNE) is a Finance stock that has seen a price change of 39.64% so far this year. The private-market investment firm is currently shelling out a dividend of $0.44 per share, with a dividend yield of 2%. This compares to the Financial - Investment Management industry's yield of 2.96% and the S&P 500's yield of 1.73%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.78 is up 11.3% from last year. Hamilton Lane has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 14.98%. 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. Right now, Hamilton Lane's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
HLNE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.88 per share, with earnings expected to increase 16.17% from the year ago period.
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. But, not every company offers 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, HLNE 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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Hamilton Lane Inc. (HLNE) : Free Stock Analysis Report
