Why Washington Federal (WAFD) is a Top Dividend Stock for Your Portfolio
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Washington Federal (WAFD) have what it takes? Let's...
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Washington Federal in Focus
Washington Federal (WAFD) is headquartered in Seattle, and is in the Finance sector. The stock has seen a price change of 3.36% since the start of the year. The holding company for Washington Federal Savings Bank is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.67% compared to the Banks - West industry's yield of 2.1% and the S&P 500's yield of 1.33%.
Looking at dividend growth, the company's current annualized dividend of $0.92 is up 1.1% from last year. Washington Federal has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.14%. 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. Washington Federal's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for WAFD for this fiscal year. The Zacks Consensus Estimate for 2022 is $2.83 per share, representing a year-over-year earnings growth rate of 18.41%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, WAFD 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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Washington Federal, Inc. (WAFD): Free Stock Analysis Report
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