Over the past 10 years Federated Investors Inc (NYSE:FII) has grown its dividend payouts from $0.96 to $1.08. With a market cap of US$2.39B, Federated Investors pays out 33.51% of its earnings, leading to a 4.53% yield. Let me elaborate on you why the stock stands out for income investors like myself. See our latest analysis for Federated Investors
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically: Its annual yield is among the top 25% of dividend payers It consistently pays out dividend without missing a payment or significantly cutting payout Its has increased its dividend per share amount over the past It can afford to pay the current rate of dividends from its earnings It is able to continue to payout at the current rate in the future
High Yield And Dependable
Federated Investors currently yields 4.53%, which is high for Capital Markets stocks. But the real reason Federated Investors stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. FII has increased its DPS from $0.96 to $1.08 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes FII a true dividend rockstar. The current trailing twelve-month payout ratio for the stock is 33.51%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 45.47%, leading to a dividend yield of around 4.63%. However, EPS is forecasted to fall to $2.41 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
There aren’t many other stocks out there with the same track record as Federated Investors, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three important factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for FII’s future growth? Take a look at our free research report of analyst consensus for FII’s outlook.
- Valuation: What is FII worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FII is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.