Why Greenbrier Companies (GBX) is a Great Dividend Stock Right Now
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Greenbrier Companies in Focus
Headquartered in Lake Oswego, Greenbrier Companies (GBX) is a Transportation stock that has seen a price change of 31.76% so far this year. The maker of railroad freight car equipment is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.72%. This compares to the Transportation - Equipment and Leasing industry's yield of 1.13% and the S&P 500's yield of 1.6%.
Looking at dividend growth, the company's current annualized dividend of $1.20 is up 8.1% from last year. Greenbrier Companies has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 2.37%. 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. Right now, Greenbrier's payout ratio is 40%, which means it paid out 40% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, GBX expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $3.50 per share, which represents a year-over-year growth rate of 17.85%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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 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 GBX 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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Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
