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Why Washington Federal (WAFD) is a Great Dividend Stock Right Now
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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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Washington Federal in Focus
Based in Seattle, Washington Federal (WAFD - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 36.87%. The holding company for Washington Federal Savings Bank is currently shelling out a dividend of $0.23 per share, with a dividend yield of 2.61%. This compares to the Banks - West industry's yield of 2.15% and the S&P 500's yield of 1.38%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.92 is up 1.1% from last year. Washington Federal has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.99%. 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. Washington Federal's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WAFD for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.51 per share, which represents a year-over-year growth rate of 5.02%.
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. With that in mind, WAFD 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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Why Washington Federal (WAFD) is a Great Dividend Stock Right Now
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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Washington Federal in Focus
Based in Seattle, Washington Federal (WAFD - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 36.87%. The holding company for Washington Federal Savings Bank is currently shelling out a dividend of $0.23 per share, with a dividend yield of 2.61%. This compares to the Banks - West industry's yield of 2.15% and the S&P 500's yield of 1.38%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.92 is up 1.1% from last year. Washington Federal has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.99%. 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. Washington Federal's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WAFD for this fiscal year. The Zacks Consensus Estimate for 2021 is $2.51 per share, which represents a year-over-year growth rate of 5.02%.
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. With that in mind, WAFD 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).