This is Why American Homes 4 Rent (AMH) is a Great Dividend Stock
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
American Homes 4 Rent in Focus
American Homes 4 Rent (AMH) is headquartered in Las Vegas, and is in the Finance sector. The stock has seen a price change of 12.34% since the start of the year. The real estate company is currently shelling out a dividend of $0.22 per share, with a dividend yield of 2.6%. This compares to the REIT and Equity Trust - Residential industry's yield of 4.33% and the S&P 500's yield of 1.7%.
In terms of dividend growth, the company's current annualized dividend of $0.88 is up 22.2% from last year. American Homes 4 Rent has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 46.04%. 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. American Homes 4 Rent's current payout ratio is 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMH expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $1.65 per share, representing a year-over-year earnings growth rate of 7.14%.
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. However, not all companies offer 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 must be conscious 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 AMH 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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American Homes 4 Rent (AMH) : Free Stock Analysis Report
