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.
Equitable Holdings, Inc. In Focus
Equitable Holdings, Inc. (EQH) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 0.91% since the start of the year. The company is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 2.02% compared to the Insurance - Multi line industry's yield of 1.83% and the S&P 500's yield of 1.69%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.96 is up 2.1% from last year. Over the last 5 years, Equitable Holdings, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.95%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Equitable Holdings's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend.
EQH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $6.84 per share, which represents a year-over-year growth rate of 15.35%.
Bottom Line
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.
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, EQH 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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Equitable Holdings, Inc. (EQH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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