Upbound Group (UPBD) Could Be a Great Choice

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Upbound Group in Focus

Upbound Group (UPBD) is headquartered in Plano, and is in the Finance sector. The stock has seen a price change of -12.86% since the start of the year. The company that leases furniture and appliances with an option to buy is paying out a dividend of $0.39 per share at the moment, with a dividend yield of 6.14% compared to the Financial - Leasing Companies industry's yield of 4.26% and the S&P 500's yield of 1.53%.

Looking at dividend growth, the company's current annualized dividend of $1.56 is up 4% from last year. Upbound Group has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 5.93%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Upbound Group's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for UPBD for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.16 per share, representing a year-over-year earnings growth rate of 8.62%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that UPBD is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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Source Zacks-com