Markets

Why Altra Industrial Motion (AIMC) is a Top Dividend Stock for Your Portfolio

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Altra Industrial Motion in Focus

Altra Industrial Motion (AIMC) is headquartered in Braintree, and is in the Industrial Products sector. The stock has seen a price change of -32.4% since the start of the year. Currently paying a dividend of $0.17 per share, the company has a dividend yield of 2%. In comparison, the Manufacturing - General Industrial industry's yield is 0.52%, while the S&P 500's yield is 1.97%.

Looking at dividend growth, the company's current annualized dividend of $0.68 is up 3% from last year. Altra Industrial Motion has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 11.38%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Altra's current payout ratio is 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for AIMC for this fiscal year. The Zacks Consensus Estimate for 2018 is $2.58 per share, which represents a year-over-year growth rate of 25.85%.

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. But, not every company offers 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that AIMC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong 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

Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AIMC

Other Topics

Investing Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More