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Why Assured Guaranty (AGO) is a Great Dividend Stock Right Now
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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 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.
Assured Guaranty in Focus
Based in Hamilton Bermuda, Assured Guaranty (AGO - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -16.99%. The insurance holding company is paying out a dividend of $0.56 per share at the moment, with a dividend yield of 2.17% compared to the Insurance - Multi line industry's yield of 2.26% and the S&P 500's yield of 1.81%.
In terms of dividend growth, the company's current annualized dividend of $1.12 is up 12% from last year. In the past five-year period, Assured Guaranty has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.69%. 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. Assured Guaranty's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
AGO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.60 per share, with earnings expected to increase 11.11% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AGO 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 Assured Guaranty (AGO) 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 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 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.
Assured Guaranty in Focus
Based in Hamilton Bermuda, Assured Guaranty (AGO - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -16.99%. The insurance holding company is paying out a dividend of $0.56 per share at the moment, with a dividend yield of 2.17% compared to the Insurance - Multi line industry's yield of 2.26% and the S&P 500's yield of 1.81%.
In terms of dividend growth, the company's current annualized dividend of $1.12 is up 12% from last year. In the past five-year period, Assured Guaranty has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.69%. 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. Assured Guaranty's current payout ratio is 29%. This means it paid out 29% of its trailing 12-month EPS as dividend.
AGO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $4.60 per share, with earnings expected to increase 11.11% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AGO 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).