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This Is Why Stifel Financial (SF) Is A Great Dividend Stock
All investors love to get great returns from their portfolio, whether through stocks, bonds, ETFs or other types of securities. But when you are an income investor, your main focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from interest on bonds or other types of investments, income investors focus on dividends. A dividend is the distribution of a company’s profits paid to shareholders; It is often viewed by its dividend yield, a metric that measures a dividend as a percentage of the current share price. Many academic studies show that dividends represent a significant portion of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Stifel Financial in Focus
Louis, Stifel Financial (SF) operates in the financial sector and so far this year, the shares have had a price change of 18.8%. The brokerage and investment banking company is paying a dividend of $0.42 per share at the moment, with a dividend yield of 2.05% compared to the Finance – Investment Banking sector’s yield of 0.45% and the S&P 500 yield of 1.58%.
Looking at dividend growth, the company’s current annualized dividend of $1.68 is up 16.7% from last year. Over the past 5 years, Stifel Financial has increased its dividend 5x year over year for an average annual increase of 42.22%. Any future dividend growth will depend on both earnings growth and the company’s payout ratio; A payout ratio is the proportion of a company’s annual earnings per share that it pays out as a dividend. Stifel’s current payout ratio is 35%. That means it paid out 35% of its earnings per share over the last 12 months as dividends.
SF expects profits to increase this fiscal year as well. The Zacks Consensus Estimate for 2024 is $7.04 per share, representing a year-over-year earnings growth rate of 50.43%.
Conclusion
Investors like dividends for a variety of reasons, from tax advantages and decreasing overall portfolio risk to significantly improving stock investment profits. However, not every company offers a quarterly payment.
For example, it’s rare for a technology start-up or high-growth company to offer dividends to its shareholders. It’s more common to see larger companies with more established profits pay out dividends. Income investors should be aware of the fact that high-yield stocks tend to struggle during periods of rising interest rates. That said, they can take comfort in the fact that SF is not only an attractive dividend play, but also represents an attractive investment opportunity with a Zacks Rank of #2 (Buy).
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Stifel Financial Corporation (SF): Free Stock Analysis Report