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.
BlackRock in Focus
BlackRock (BLK) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -3.27% since the start of the year. The investment firm is paying out a dividend of $5.1 per share at the moment, with a dividend yield of 2.6% compared to the Financial – Investment Management industry’s yield of 2.65% and the S&P 500’s yield of 1.59%.
Taking a look at the company’s dividend growth, its current annualized dividend of $20.40 is up 2% from last year. BlackRock has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.21%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company’s annual earnings per share that it pays out as a dividend. BlackRock’s current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
BLK is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $41.25 per share, representing a year-over-year earnings growth rate of 9.21%.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BLK 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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BlackRock, Inc. (BLK) : Free Stock Analysis Report
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