Why Voya Financial (VOYA) 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. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Voya Financial in Focus
Voya Financial (VOYA) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 9.27% since the start of the year. Currently paying a dividend of $0.4 per share, the company has a dividend yield of 2.38%. In comparison, the Insurance - Life Insurance industry's yield is 0.06%, while the S&P 500's yield is 1.74%.
In terms of dividend growth, the company's current annualized dividend of $1.60 is up 100% from last year. Voya Financial has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 71.41%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Voya's current payout ratio is 9%. This means it paid out 9% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, VOYA expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $7.94 per share, with earnings expected to increase 4.75% from the year ago period.
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. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, VOYA 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).
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
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
