Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Robert Half in Focus
Headquartered in Menlo Park, Robert Half (RHI) is a Business Services stock that has seen a price change of -0.86% so far this year. The staffing firm is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 2.19% compared to the Staffing Firms industry's yield of 1.26% and the S&P 500's yield of 1.95%.
Looking at dividend growth, the company's current annualized dividend of $1.24 is up 10.7% from last year. In the past five-year period, Robert Half has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.49%. 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. Robert Half's current payout ratio is 33%, meaning it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RHI for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.98 per share, which represents a year-over-year growth rate of 10.25%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. With that in mind, RHI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Robert Half International Inc. (RHI) : Free Stock Analysis Report
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