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.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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.
Upbound Group (UPBD) is headquartered in Plano, and is in the Finance sector. The stock has seen a price change of -22.04% since the start of the year. Currently paying a dividend of $0.39 per share, the company has a dividend yield of 6.86%. In comparison, the Financial - Leasing Companies industry's yield is 4.01%, while the S&P 500's yield is 1.5%.
Looking at dividend growth, the company's current annualized dividend of $1.56 is up 4% from last year. Over the last 5 years, Upbound Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.75%. 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. Upbound Group's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, UPBD expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $4.24 per share, representing a year-over-year earnings growth rate of 10.70%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UPBD 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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Upbound Group, Inc. (UPBD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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