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Why Invitation Home (INVH) is a Top Dividend Stock for Your Portfolio

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Invitation Home in Focus

Invitation Home (INVH - Free Report) is headquartered in Dallas, and is in the Finance sector. The stock has seen a price change of 13.87% since the start of the year. Currently paying a dividend of $0.26 per share, the company has a dividend yield of 3.08%. In comparison, the REIT and Equity Trust - Residential industry's yield is 3.89%, while the S&P 500's yield is 1.66%.

In terms of dividend growth, the company's current annualized dividend of $1.04 is up 18.2% from last year. In the past five-year period, Invitation Home has increased its dividend 5 times on a year-over-year basis for an average annual increase of 19.14%. 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. Invitation Home's current payout ratio is 60%. This means it paid out 60% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for INVH for this fiscal year. The Zacks Consensus Estimate for 2023 is $1.79 per share, with earnings expected to increase 7.19% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, INVH presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).


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