Why FNF Group (FNF) is a Great Dividend Stock Right Now
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.
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.
FNF Group in Focus
Based in Jacksonville, FNF Group (FNF) is in the Finance sector, and so far this year, shares have seen a price change of -30.92%. Currently paying a dividend of $0.33 per share, the company has a dividend yield of 4.21%. In comparison, the Insurance - Property and Casualty industry's yield is 1.25%, while the S&P 500's yield is 1.69%.
In terms of dividend growth, the company's current annualized dividend of $1.32 is up 4.8% from last year. Over the last 5 years, FNF Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.22%. 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. FNF Group's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, FNF expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $4.03 per share, which represents a year-over-year growth rate of 18.88%.
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. That said, they can take comfort from the fact that FNF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
To read this article on Zacks.com click here.
