This Is Why Evercore (EVR) Is A Great Dividend Stock

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Evercore in Focus

Evercore (EVR) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -17.51% since the start of the year. The investment bank is paying out a dividend of $0.58 per share at the moment, with a dividend yield of 3.76% compared to the Financial - Investment Bank industry's yield of 0.66% and the S&P 500's yield of 2.08%.

Looking at dividend growth, the company's current annualized dividend of $2.32 is up 3.6% from last year. Evercore has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 18.90%. 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. Right now, Evercore's payout ratio is 30%, which means it paid out 30% of its trailing 12-month EPS as dividend.

EVR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $8.90 per share, with earnings expected to increase 15.58% 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. But, not every company offers 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. That said, they can take comfort from the fact that EVR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).