Yahoo Finance Why Morgan Stanley (MS) 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. 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.
Morgan Stanley in Focus
Headquartered in New York, Morgan Stanley (MS) is a Finance stock that has seen a price change of -1.26% so far this year. Currently paying a dividend of $0.77 per share, the company has a dividend yield of 3.69%. In comparison, the Financial - Investment Bank industry's yield is 0.5%, while the S&P 500's yield is 1.8%.
In terms of dividend growth, the company's current annualized dividend of $3.10 is up 5.1% from last year. In the past five-year period, Morgan Stanley has increased its dividend 4 times on a year-over-year basis for an average annual increase of 27.74%. 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. Morgan Stanley's current payout ratio is 49%. This means it paid out 49% of its trailing 12-month EPS as dividend.
MS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $7.10 per share, representing a year-over-year earnings growth rate of 11.64%.
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. However, not all companies offer 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. With that in mind, MS 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).
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
Morgan Stanley (MS) : Free Stock Analysis Report
