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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.
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.
Matthews International in Focus
Headquartered in Pittsburgh, Matthews International (MATW) is a Consumer Staples stock that has seen a price change of -41.58% so far this year. The casket and memorial manufacturer is paying out a dividend of $0.21 per share at the moment, with a dividend yield of 3.77% compared to the Funeral Services industry's yield of 3.2% and the S&P 500's yield of 2.34%.
Looking at dividend growth, the company's current annualized dividend of $0.84 is up 5% from last year. Matthews International has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 10.39%. 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. Matthews International's current payout ratio is 26%. This means it paid out 26% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, MATW expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $3.42 per share, which represents a year-over-year growth rate of 3.32%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MATW presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Matthews International Corporation (MATW) : Free Stock Analysis Report
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