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Why American Homes 4 Rent (AMH) 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. But 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.
American Homes 4 Rent in Focus
American Homes 4 Rent (AMH - Free Report) is headquartered in Las Vegas, and is in the Finance sector. The stock has seen a price change of 4.98% since the start of the year. The real estate company is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.76% compared to the REIT and Equity Trust - Residential industry's yield of 3.42% and the S&P 500's yield of 1.64%.
Looking at dividend growth, the company's current annualized dividend of $1.04 is up 18.2% from last year. American Homes 4 Rent has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 52.30%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. American Homes 4 Rent's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMH expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $1.74 per share, representing a year-over-year earnings growth rate of 4.82%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. With that in mind, AMH 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 American Homes 4 Rent (AMH) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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.
American Homes 4 Rent in Focus
American Homes 4 Rent (AMH - Free Report) is headquartered in Las Vegas, and is in the Finance sector. The stock has seen a price change of 4.98% since the start of the year. The real estate company is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 2.76% compared to the REIT and Equity Trust - Residential industry's yield of 3.42% and the S&P 500's yield of 1.64%.
Looking at dividend growth, the company's current annualized dividend of $1.04 is up 18.2% from last year. American Homes 4 Rent has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 52.30%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. American Homes 4 Rent's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMH expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $1.74 per share, representing a year-over-year earnings growth rate of 4.82%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. With that in mind, AMH 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).