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 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.
National Health Investors in Focus
National Health Investors (NHI) is headquartered in Murfreesboro, and is in the Finance sector. The stock has seen a price change of -2.03% since the start of the year. The health care real estate investment trust is paying out a dividend of $1 per share at the moment, with a dividend yield of 5.42% compared to the REIT and Equity Trust - Other industry's yield of 4.51% and the S&P 500's yield of 2%.
In terms of dividend growth, the company's current annualized dividend of $4 is up 5.3% from last year. Over the last 5 years, National Health Investors has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.68%. 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. National Health Investors's current payout ratio is 73%, meaning it paid out 73% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, NHI expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $5.51 per share, which represents a year-over-year growth rate of 3.38%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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. 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 NHI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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National Health Investors, Inc. (NHI) : Free Stock Analysis Report
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