Are You Looking for a High-Growth Dividend Stock? Herman Miller (MLHR) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Herman Miller in Focus
Herman Miller (MLHR) is headquartered in Zeeland, and is in the Business Services sector. The stock has seen a price change of 14.88% since the start of the year. The furniture maker is paying out a dividend of $0.2 per share at the moment, with a dividend yield of 2.27% compared to the Business - Office Products industry's yield of 2.78% and the S&P 500's yield of 1.98%.
Looking at dividend growth, the company's current annualized dividend of $0.79 is up 9.7% from last year. In the past five-year period, Herman Miller has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.46%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Herman Miller's current payout ratio is 30%. This means it paid out 30% of its trailing 12-month EPS as dividend.
MLHR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $2.76 per share, representing a year-over-year earnings growth rate of 20%.
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. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that MLHR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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