Why Equitable Holdings, Inc. (EQH) is a Great Dividend Stock Right Now
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.
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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Equitable Holdings, Inc. (EQH) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 12.08% since the start of the year. The company is currently shelling out a dividend of $0.27 per share, with a dividend yield of 2.04%. This compares to the Insurance - Multi line industry's yield of 1.84% and the S&P 500's yield of 1.59%.
Looking at dividend growth, the company's current annualized dividend of $1.08 is up 14.9% from last year. Over the last 5 years, Equitable Holdings, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.95%. 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. Right now, Equitable Holdings's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend.
EQH is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $6.55 per share, representing a year-over-year earnings growth rate of 10.46%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, EQH 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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This article originally published on Zacks Investment Research (zacks.com).
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