Why Invesco (IVZ) is a Great Dividend Stock Right Now

Investors always seek ways to achieve significant returns on their investments, whether in stocks, bonds, ETFs, or various other financial instruments. For income-oriented investors, the main goal is to generate reliable cash flow from their investments.

Cash flow can originate from bond interest, returns from different investment types, and, notably, from dividends. A dividend represents a company's earnings distributed to its shareholders and is often gauged by its dividend yield, a percentage that reflects the dividend amount in relation to the stock's current price. Numerous academic studies indicate that dividends significantly contribute to overall long-term returns, and in many cases, returns attributed to dividends can exceed one-third of total investment gains.

Invesco Overview

Invesco (IVZ), based in Atlanta, is a finance company that has witnessed a price increase of 10.64% this year. Known for its investment management services, Invesco currently offers a dividend of $0.20 per share, translating to a dividend yield of 4.24%. This yield is substantially higher than the Financial - Investment Management industry's average of 2.66% and also surpasses the S&P 500's yield of 1.48%.

Regarding dividend growth, Invesco has elevated its annualized dividend to $0.82, marking a growth of 0.6% from the previous year. Over the last five years, the company has consistently raised its dividend three times, resulting in an average annual growth rate of 4.32%. Future growth in dividends will likely hinge on both earnings expansion and the company's payout ratio, which represents the percentage of its annual earnings per share that is returned to shareholders through dividends. Presently, Invesco's payout ratio stands at 49%, indicating it distributed 49% of its trailing 12-month earnings per share as dividends.

As for projections, Invesco anticipates solid earnings growth for the current fiscal year. The Zacks Consensus Estimate for 2025 expects earnings of $1.85 per share, reflecting a year-over-year growth rate of 8.19%.

Conclusion

Investors appreciate dividends for various reasons, including enhanced investment profitability, improved portfolio risk management, and tax advantages. However, not all companies provide regular dividend payouts.

Large, established companies with stable earnings are often considered the best candidates for dividend investments, while high-growth sectors like technology and start-ups usually don't offer dividends. In times of rising interest rates, it's essential for income investors to know that high-yielding stocks might encounter challenges. Given these considerations, IVZ emerges as a promising investment opportunity. Not only is it a viable dividend option, but it is also rated with a Zacks Rank of 3 (Hold).

Dividends, Investing, Earnings