FNF Group (FNF) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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
Headquartered in Jacksonville, FNF Group (FNF) is a Finance stock that has seen a price change of -26.22% so far this year. The provider of title insurance and mortgage services is paying out a dividend of $0.33 per share at the moment, with a dividend yield of 3.94% compared to the Insurance - Property and Casualty industry's yield of 1.21% and the S&P 500's yield of 1.62%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.32 is up 4.8% from last year. In the past five-year period, FNF Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.22%. 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. FNF Group's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.
FNF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $4.03 per share, representing a year-over-year earnings growth rate of 18.88%.
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.
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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, FNF presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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