Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
FNF Group in Focus
FNF Group (FNF) is headquartered in Jacksonville, and is in the Finance sector. The stock has seen a price change of 35.62% since the start of the year. The provider of title insurance and mortgage services is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 2.91% compared to the Insurance - Property and Casualty industry's yield of 1.33% and the S&P 500's yield of 1.87%.
Looking at dividend growth, the company's current annualized dividend of $1.24 is up 3.3% from last year. FNF Group has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 13.85%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. FNF Group's current payout ratio is 45%, meaning it paid out 45% of its trailing 12-month EPS as dividend.
FNF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $2.85 per share, with earnings expected to increase 5.56% from the year ago period.
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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. With that in mind, FNF 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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