Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
Carlyle Group in Focus
Headquartered in Washington, Carlyle Group (CG) is a Finance stock that has seen a price change of 6.66% so far this year. The asset management firm is paying out a dividend of $0.35 per share at the moment, with a dividend yield of 3.23% compared to the Financial – Investment Funds industry’s yield of 4.07% and the S&P 500’s yield of 1.58%.
Looking at dividend growth, the company’s current annualized dividend of $1.40 is up 1.8% from last year. In the past five-year period, Carlyle Group has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.06%. 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. Right now, Carlyle’s payout ratio is 39%, which means it paid out 39% of its trailing 12-month EPS as dividend.
CG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $3.92 per share, with earnings expected to increase 20.99% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CG 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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Carlyle Group Inc. (CG) : Free Stock Analysis Report
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