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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Reinsurance Group in Focus
Based in Chesterfield, Reinsurance Group (RGA - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -2.87%. The reinsurance company is currently shelling out a dividend of $0.8 per share, with a dividend yield of 2.32%. This compares to the Insurance - Life Insurance industry's yield of 0.07% and the S&P 500's yield of 1.66%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.20 is up 4.6% from last year. Reinsurance Group has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 7.33%. 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. Reinsurance Group's current payout ratio is 17%. This means it paid out 17% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RGA for this fiscal year. The Zacks Consensus Estimate for 2023 is $17.77 per share, with earnings expected to increase 23.15% 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. However, not all companies offer 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, RGA presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Reinsurance Group (RGA) Could Be a Great Choice
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Reinsurance Group in Focus
Based in Chesterfield, Reinsurance Group (RGA - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -2.87%. The reinsurance company is currently shelling out a dividend of $0.8 per share, with a dividend yield of 2.32%. This compares to the Insurance - Life Insurance industry's yield of 0.07% and the S&P 500's yield of 1.66%.
Taking a look at the company's dividend growth, its current annualized dividend of $3.20 is up 4.6% from last year. Reinsurance Group has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 7.33%. 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. Reinsurance Group's current payout ratio is 17%. This means it paid out 17% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for RGA for this fiscal year. The Zacks Consensus Estimate for 2023 is $17.77 per share, with earnings expected to increase 23.15% 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. However, not all companies offer 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, RGA presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).