Are You Looking for a High-Growth Dividend Stock? Axis Capital (AXS) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Axis Capital in Focus
Based in Pembroke, Axis Capital (AXS) is in the Finance sector, and so far this year, shares have seen a price change of 10.15%. The insurance company is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.87%. This compares to the Insurance - Property and Casualty industry's yield of 0.97% and the S&P 500's yield of 1.44%.
Looking at dividend growth, the company's current annualized dividend of $1.72 is up 2.4% from last year. In the past five-year period, Axis Capital has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.40%. 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. Right now, Axis Capital's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for AXS for this fiscal year. The Zacks Consensus Estimate for 2022 is $5.90 per share, with earnings expected to increase 15.23% 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, AXS 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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