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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 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.
BlackRock in Focus
Headquartered in New York, BlackRock (BLK) is a Finance stock that has seen a price change of 14.13% so far this year. The investment firm is paying out a dividend of $4.13 per share at the moment, with a dividend yield of 2.01% compared to the Financial - Investment Management industry's yield of 1.29% and the S&P 500's yield of 1.32%.
Taking a look at the company's dividend growth, its current annualized dividend of $16.52 is up 13.8% from last year. Over the last 5 years, BlackRock has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.93%. 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. BlackRock's current payout ratio is 47%, meaning it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BLK for this fiscal year. The Zacks Consensus Estimate for 2021 is $36.60 per share, which represents a year-over-year growth rate of 8.22%.
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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BLK 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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BlackRock, Inc. (BLK) : Free Stock Analysis Report
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