This is Why Ryman Hospitality Properties (RHP) 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.
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.
Ryman Hospitality Properties in Focus
Based in Nashville, Ryman Hospitality Properties (RHP) is in the Finance sector, and so far this year, shares have seen a price change of 23.6%. The hotel and resort real estate investment trust is currently shelling out a dividend of $0.9 per share, with a dividend yield of 4.37%. This compares to the REIT and Equity Trust - Other industry's yield of 4.06% and the S&P 500's yield of 1.91%.
Looking at dividend growth, the company's current annualized dividend of $3.60 is up 5.9% from last year. Over the last 5 years, Ryman Hospitality Properties has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.44%. 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, Ryman Hospitality Properties's payout ratio is 56%, which means it paid out 56% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, RHP expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $6.79 per share, representing a year-over-year earnings growth rate of 15.87%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, RHP 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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