Why Voya Financial (VOYA) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Voya Financial in Focus
Based in New York, Voya Financial (VOYA) is in the Finance sector, and so far this year, shares have seen a price change of 15.22%. The retirement, investment and insurance company is paying out a dividend of $0.4 per share at the moment, with a dividend yield of 2.26% compared to the Insurance - Life Insurance industry's yield of 0.06% and the S&P 500's yield of 1.65%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.60 is up 100% from last year. In the past five-year period, Voya Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 82.68%. 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. Voya's current payout ratio is 9%, meaning it paid out 9% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for VOYA for this fiscal year. The Zacks Consensus Estimate for 2023 is $7.97 per share, which represents a year-over-year growth rate of 5.15%.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. 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).
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Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
