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Are You Looking for a High-Growth Dividend Stock? Travelers (TRV) Could Be a Great Choice
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Travelers in Focus
Headquartered in New York, Travelers (TRV - Free Report) is a Finance stock that has seen a price change of 3.9% so far this year. Currently paying a dividend of $0.85 per share, the company has a dividend yield of 2.33%. In comparison, the Insurance - Property and Casualty industry's yield is 1.32%, while the S&P 500's yield is 1.42%.
In terms of dividend growth, the company's current annualized dividend of $3.40 is up 0.9% from last year. Travelers has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.64%. 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. Travelers's current payout ratio is 38%. This means it paid out 38% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TRV for this fiscal year. The Zacks Consensus Estimate for 2021 is $10.65 per share, representing a year-over-year earnings growth rate of 1.62%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that TRV is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Are You Looking for a High-Growth Dividend Stock? Travelers (TRV) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Travelers in Focus
Headquartered in New York, Travelers (TRV - Free Report) is a Finance stock that has seen a price change of 3.9% so far this year. Currently paying a dividend of $0.85 per share, the company has a dividend yield of 2.33%. In comparison, the Insurance - Property and Casualty industry's yield is 1.32%, while the S&P 500's yield is 1.42%.
In terms of dividend growth, the company's current annualized dividend of $3.40 is up 0.9% from last year. Travelers has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.64%. 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. Travelers's current payout ratio is 38%. This means it paid out 38% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TRV for this fiscal year. The Zacks Consensus Estimate for 2021 is $10.65 per share, representing a year-over-year earnings growth rate of 1.62%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that TRV is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).