Are You Looking for a High-Growth Dividend Stock? CyrusOne (CONE) Could Be a Great Choice
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.
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.
CyrusOne in Focus
CyrusOne (CONE) is headquartered in Dallas, and is in the Finance sector. The stock has seen a price change of 0.27% since the start of the year. Currently paying a dividend of $0.52 per share, the company has a dividend yield of 2.31%. In comparison, the REIT and Equity Trust - Other industry's yield is 3.18%, while the S&P 500's yield is 1.45%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.08 is up 1% from last year. Over the last 5 years, CyrusOne has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.09%. 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. CyrusOne's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CONE expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $4.28 per share, with earnings expected to increase 7.27% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that CONE 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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