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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
MetLife in Focus
MetLife (MET) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 11.69% since the start of the year. The insurer is currently shelling out a dividend of $0.42 per share, with a dividend yield of 3.66%. This compares to the Insurance - Multi line industry's yield of 2.3% and the S&P 500's yield of 1.89%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.68 is up 1.2% from last year. In the past five-year period, MetLife has increased its dividend 4 times on a year-over-year basis for an average annual increase of 4.22%. 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. MetLife's current payout ratio is 31%. This means it paid out 31% of its trailing 12-month EPS as dividend.
MET is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $5.48 per share, which represents a year-over-year growth rate of 1.67%.
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.
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. With that in mind, MET 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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MetLife, Inc. (MET) : Free Stock Analysis Report
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