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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.
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.
Equitable Holdings, Inc. In Focus
Equitable Holdings, Inc. (EQH) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -4.39% since the start of the year. The company is currently shelling out a dividend of $0.24 per share, with a dividend yield of 2.13%. This compares to the Insurance - Multi line industry's yield of 1.56% and the S&P 500's yield of 1.73%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.96 is up 2.1% from last year. Equitable Holdings, Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.51%. 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. Equitable Holdings's current payout ratio is 16%. This means it paid out 16% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EQH expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $7.13 per share, representing a year-over-year earnings growth rate of 20.24%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EQH 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).