All investors like to get big returns from their portfolio, whether through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary goal.
Cash flow can come from bond interest, interest from other types of investments and, of course, dividends. A dividend is that coveted distribution of a company’s profits paid to shareholders, and investors often view it by its dividend yield, a measure that measures the dividend as a percentage of the current stock price. Numerous academic studies show that dividends are a significant part of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Featured Janus Henderson Group plc
London-based Janus Henderson Group plc (JHG – Free Report) is in the finance industry, and so far this year stocks have seen a 32.21% price change. Currently paying a dividend of $ 0.38 per share, the company has a dividend yield of 3.54%. In comparison, the performance of the Financial – Investment Management industry is 1.69%, while the return of the S&P 500 is 1.41%.
Looking at the company’s dividend growth, its current annualized dividend of $ 1.52 is up 5.6% from a year ago. Over the past five years, Janus Henderson Group plc has increased its dividend 2 times year on year for an average annual increase of 10.11%. Any future dividend growth will depend on both earnings growth and the payout ratio of the company; a payout ratio is the proportion of a company’s annual earnings per share that it pays out as a dividend. Currently, Janus Henderson Group plc’s payout ratio is 40%, which means it has paid 40% of its past 12-month EPS as a dividend.
JHG also expects an increase in profits this fiscal year. Zacks’ consensus estimate for 2021 is $ 4.06 per share, which represents a year-over-year profit growth rate of 34.88%.
Investors love dividends for many reasons; they dramatically improve the returns from equity investments, lower overall portfolio risk, and provide tax benefits, among others. It is important to keep in mind that not all companies provide quarterly payment.
Large, established companies that have safer earnings are often considered the best dividend options, but it is quite rare to see high growth companies or tech start-ups offering a dividend to their shareholders. During times of rising interest rates, income investors should be aware that high yielding stocks tend to struggle. That said, they can take comfort in the fact that JHG is not only an attractive dividend game, but also a compelling investment opportunity with a Zacks # 1 (strong buy) ranking.