All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Robert Half in Focus
Based in Menlo Park, Robert Half (RHI) is in the Business Services sector, and so far this year, shares have seen a price change of 3.27%. Currently paying a dividend of $0.31 per share, the company has a dividend yield of 2.1%. In comparison, the Staffing Firms industry's yield is 1.16%, while the S&P 500's yield is 1.87%.
In terms of dividend growth, the company's current annualized dividend of $1.24 is up 10.7% from last year. In the past five-year period, Robert Half has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.81%. 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, Robert Half's payout ratio is 33%, which means it paid out 33% of its trailing 12-month EPS as dividend.
RHI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $3.98 per share, with earnings expected to increase 10.25% from the year ago period.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, RHI 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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Robert Half International Inc. (RHI) : Free Stock Analysis Report
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