Why Costamare (CMRE) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.

Costamare in Focus

Costamare (CMRE) is headquartered in Monaco, and is in the Transportation sector. The stock has seen a price change of -18.34% since the start of the year. Currently paying a dividend of $0.12 per share, the company has a dividend yield of 4.45%. In comparison, the Transportation - Shipping industry's yield is 1.48%, while the S&P 500's yield is 1.72%.

In terms of dividend growth, the company's current annualized dividend of $0.46 is up 7% from last year. Over the last 5 years, Costamare has increased its dividend 1 times on a year-over-year basis for an average annual increase of 2.73%. 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. Costamare's current payout ratio is 14%, meaning it paid out 14% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for CMRE for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.94 per share, which represents a year-over-year growth rate of 66.95%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that CMRE is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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