Are You Looking for a High-Growth Dividend Stock? Lincoln National (LNC) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.
Lincoln National in Focus
Lincoln National (LNC) is headquartered in Radnor, and is in the Finance sector. The stock has seen a price change of 23.72% since the start of the year. The insurance and retirement business is currently shelling out a dividend of $0.37 per share, with a dividend yield of 2.33%. This compares to the Insurance - Life Insurance industry's yield of 0.49% and the S&P 500's yield of 1.94%.
Looking at dividend growth, the company's current annualized dividend of $1.48 is up 12.1% from last year. Lincoln National has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 19.15%. 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. Lincoln National's current payout ratio is 17%. This means it paid out 17% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for LNC for this fiscal year. The Zacks Consensus Estimate for 2019 is $9.29 per share, which represents a year-over-year growth rate of 9.55%.
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.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, LNC 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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