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.
CyrusOne in Focus
Based in Dallas, CyrusOne (CONE) is in the Finance sector, and so far this year, shares have seen a price change of 43.91%. The data center operator is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.63% compared to the REIT and Equity Trust - Other industry's yield of 4.06% and the S&P 500's yield of 1.91%.
Looking at dividend growth, the company's current annualized dividend of $2 is up 8.7% from last year. CyrusOne has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.31%. 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 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CONE for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.55 per share, representing a year-over-year earnings growth rate of 7.25%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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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CyrusOne Inc (CONE) : Free Stock Analysis Report
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