Why Axis Capital (AXS) is a Top Dividend Stock for Your Portfolio
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 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.
Axis Capital in Focus
Headquartered in Pembroke, Axis Capital (AXS) is a Finance stock that has seen a price change of -5.93% so far this year. The insurance company is paying out a dividend of $0.43 per share at the moment, with a dividend yield of 3.36% compared to the Insurance - Property and Casualty industry's yield of 1.01% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.72 is up 2.4% from last year. Over the last 5 years, Axis Capital has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.28%. 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. Axis Capital's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AXS for this fiscal year. The Zacks Consensus Estimate for 2022 is $5.55 per share, with earnings expected to increase 8.40% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AXS 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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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
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