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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.
Federated Hermes in Focus
Federated Hermes (FHI - Free Report) is headquartered in Pittsburgh, and is in the Finance sector. The stock has seen a price change of 5.76% since the start of the year. Currently paying a dividend of $0.28 per share, the company has a dividend yield of 3.13%. In comparison, the Financial - Investment Management industry's yield is 2.74%, while the S&P 500's yield is 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.12 is up 0.9% from last year. Federated Hermes has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 0.56%. 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. Federated Hermes's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FHI for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.64 per share, with earnings expected to increase 7.06% 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. But, not every company offers 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. That said, they can take comfort from the fact that FHI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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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.
Federated Hermes in Focus
Federated Hermes (FHI - Free Report) is headquartered in Pittsburgh, and is in the Finance sector. The stock has seen a price change of 5.76% since the start of the year. Currently paying a dividend of $0.28 per share, the company has a dividend yield of 3.13%. In comparison, the Financial - Investment Management industry's yield is 2.74%, while the S&P 500's yield is 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.12 is up 0.9% from last year. Federated Hermes has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 0.56%. 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. Federated Hermes's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for FHI for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.64 per share, with earnings expected to increase 7.06% 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. But, not every company offers 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. That said, they can take comfort from the fact that FHI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).