Yahoo Finance Why Cincinnati Financial (CINF) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Cincinnati Financial in Focus
Cincinnati Financial (CINF) is headquartered in Fairfield, and is in the Finance sector. The stock has seen a price change of 12.09% since the start of the year. Currently paying a dividend of $0.81 per share, the company has a dividend yield of 2.79%. In comparison, the Insurance - Property and Casualty industry's yield is 0.19%, while the S&P 500's yield is 1.58%.
In terms of dividend growth, the company's current annualized dividend of $3.24 is up 8% from last year. In the past five-year period, Cincinnati Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.71%. 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. Cincinnati Financial's current payout ratio is 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CINF expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $6.37 per share, which represents a year-over-year growth rate of 5.64%.
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. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CINF 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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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
