All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.
Upbound Group in Focus
Headquartered in Plano, Upbound Group (UPBD) is a Finance stock that has seen a price change of -18.89% so far this year. The company that leases furniture and appliances with an option to buy is currently shelling out a dividend of $0.39 per share, with a dividend yield of 6.59%. This compares to the Financial - Leasing Companies industry's yield of 3.94% and the S&P 500's yield of 1.57%.
Taking a look at the company's dividend growth, its 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 5.93%. 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. Upbound Group's current payout ratio is 39%, meaning it paid out 39% 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 $4.16 per share, with earnings expected to increase 8.62% from the year ago period.
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. It's important to keep in mind that not all companies provide 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, UPBD presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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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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