An investor’s dream is to obtain high returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a mix of all. But income investors’ main goal is to get a steady flow of cash from each of their liquid investments.
Bond interest, interest from other sorts of investments, and dividends all contribute to cash flow. A dividend is the sought-after transfer of a company’s earnings to its shareholders, and investors frequently evaluate it based on its dividend yield, which calculates the dividend as a percentage of the current stock price. Many academic studies show that dividends make up a big part of long-term returns, with dividends often making up one-third of total returns.
Axis Capital in Focus
Axis Capital (AXS) is a financial company based in Pembroke, Massachusetts. The price of the stock has changed by 15.52 percent since the beginning of the year. The company now pays a dividend of $0.44 per share and has a dividend yield of 2.81 percent. Compared to the S&P 500, the Insurance – Property and Casualty industry has a yield of 0.68 percent.
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The company’s current yearly dividend of $1.76 is 1.7% higher than it was a year ago. Axis Capital has boosted its dividend four times annually during the past five years, for an average annual rise of 2.39 percent. Future dividend growth will be contingent on both profit 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. Axis Capital’s current payout ratio is 30%, which means that the company gave out 30% of its trailing 12-month earnings per share as dividends.
The outlook for AXS’s earnings growth for this fiscal year is positive. The Zacks Consensus Estimate for 2023 is $7.53 per share, with predicted earnings growth of 29.60% from the prior-year period.
Bottom Line
Dividends appeal to investors for a variety of reasons, including the fact that they substantially increase stock investment earnings, reduce overall portfolio risk, and provide tax advantages. Nevertheless, not all businesses offer quarterly dividends.
High-growth companies or tech start-ups, for instance, rarely pay dividends to their shareholders, whereas larger, more established corporations with more stable revenues are typically seen as the best dividend possibilities. High-yielding equities typically struggle during periods of rising interest rates, a fact that income investors must be aware of. But they can take solace in the knowledge that AXS is not only an attractive dividend stock but also a great investment opportunity with a Zacks Rank #1 (Strong Buy).
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