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This is Why Sun Life (SLF) is a Great Dividend Stock
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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. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 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.
Sun Life in Focus
Headquartered in Toronto, Sun Life (SLF - Free Report) is a Finance stock that has seen a price change of 4.6% so far this year. The financial services company is currently shelling out a dividend of $0.53 per share, with a dividend yield of 3.66%. This compares to the Insurance - Life Insurance industry's yield of 0.78% and the S&P 500's yield of 1.35%.
In terms of dividend growth, the company's current annualized dividend of $2.13 is up 15.1% from last year. In the past five-year period, Sun Life has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.82%. 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. Sun Life's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
SLF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $5.13 per share, representing a year-over-year earnings growth rate of 6.65%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. 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, SLF 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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This is Why Sun Life (SLF) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 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.
Sun Life in Focus
Headquartered in Toronto, Sun Life (SLF - Free Report) is a Finance stock that has seen a price change of 4.6% so far this year. The financial services company is currently shelling out a dividend of $0.53 per share, with a dividend yield of 3.66%. This compares to the Insurance - Life Insurance industry's yield of 0.78% and the S&P 500's yield of 1.35%.
In terms of dividend growth, the company's current annualized dividend of $2.13 is up 15.1% from last year. In the past five-year period, Sun Life has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.82%. 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. Sun Life's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
SLF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $5.13 per share, representing a year-over-year earnings growth rate of 6.65%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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. 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, SLF 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).