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TD Ameritrade (AMTD) is a Top Dividend Stock Right Now: Should You Buy?
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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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
TD Ameritrade in Focus
TD Ameritrade (AMTD - Free Report) is headquartered in Omaha, and is in the Finance sector. The stock has seen a price change of 1.39% since the start of the year. The online brokerage is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.42%. This compares to the Financial - Investment Bank industry's yield of 1.06% and the S&P 500's yield of 1.97%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 42.9% from last year. In the past five-year period, TD Ameritrade has increased its dividend 5 times on a year-over-year basis for an average annual increase of 15.10%. 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. TD Ameritrade's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMTD expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.07 per share, with earnings expected to increase 21.86% 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. 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, AMTD 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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TD Ameritrade (AMTD) is a Top Dividend Stock Right Now: Should You Buy?
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.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.
TD Ameritrade in Focus
TD Ameritrade (AMTD - Free Report) is headquartered in Omaha, and is in the Finance sector. The stock has seen a price change of 1.39% since the start of the year. The online brokerage is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.42%. This compares to the Financial - Investment Bank industry's yield of 1.06% and the S&P 500's yield of 1.97%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 42.9% from last year. In the past five-year period, TD Ameritrade has increased its dividend 5 times on a year-over-year basis for an average annual increase of 15.10%. 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. TD Ameritrade's current payout ratio is 33%. This means it paid out 33% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, AMTD expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.07 per share, with earnings expected to increase 21.86% 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. 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, AMTD 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).