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Why Assurant (AIZ) is a Great Dividend Stock Right Now

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.

Assurant in Focus

Headquartered in New York, Assurant (AIZ) is a Finance stock that has seen a price change of 3.44% so far this year. Currently paying a dividend of $0.7 per share, the company has a dividend yield of 2.16%. In comparison, the Insurance - Multi line industry's yield is 2.32%, while the S&P 500's yield is 1.79%.

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Taking a look at the company's dividend growth, its current annualized dividend of $2.80 is up 2.2% from last year. Over the last 5 years, Assurant has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.55%. 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. Right now, Assurant's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, AIZ expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $13.91 per share, with earnings expected to increase 24.98% from the year ago period.

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. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AIZ 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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