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Why Silvercrest (SAMG) is a Great Dividend Stock Right Now

Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Silvercrest (SAMG) have what i...

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This story originally appeared on Zacks

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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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.

Silvercrest in Focus

Based in New York, Silvercrest (SAMG) is in the Finance sector, and so far this year, shares have seen a price change of 14.04%. The investment company is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 4.29% compared to the Financial - Investment Management industry's yield of 1.55% and the S&P 500's yield of 1.4%.

Looking at dividend growth, the company's current annualized dividend of $0.68 is up 6.3% from last year. Silvercrest has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 7.90%. 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. Silvercrest's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, SAMG expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $1.67 per share, representing a year-over-year earnings growth rate of 30.47%.

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.

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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, SAMG 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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