This is Why Manulife Financial (MFC) is a Great Dividend Stock
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.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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.
Manulife Financial in Focus
Based in Toronto, Manulife Financial (MFC) is in the Finance sector, and so far this year, shares have seen a price change of 11.85%. Currently paying a dividend of $0.26 per share, the company has a dividend yield of 4.87%. In comparison, the Insurance - Life Insurance industry's yield is 0.8%, while the S&P 500's yield is 1.46%.
Looking at dividend growth, the company's current annualized dividend of $1.04 is up 11.9% from last year. Over the last 5 years, Manulife Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.38%. 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. Manulife's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
MFC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $2.79 per share, with earnings expected to increase 7.72% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 MFC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Manulife Financial Corp (MFC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
