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

Every investor aims for substantial returns from their portfolio, whether they choose stocks, bonds, ETFs, or various other securities. For income investors, however, the main goal is to generate a steady cash flow from their investments.

Cash flow can stem from bond interest, yields from other investments, and, importantly, dividends. A dividend is a portion of a company's profit distributed to its shareholders, typically noted as a dividend yield, which reflects the dividend as a percentage of the current stock price. Numerous academic studies indicate that dividends significantly contribute to long-term investment returns, often accounting for more than a third of total gains.

Invesco in Focus

Invesco (IVZ), based in Atlanta, is a finance stock that has recorded a price change of 10.64% this year alone. This investment management company currently offers a dividend of $0.20 per share, leading to a robust dividend yield of 4.24%. This contrasts sharply with the Financial - Investment Management sector, which has an average yield of 2.66%, along with the S&P 500's yield of merely 1.48%.

Looking at dividend growth, Invesco's current annualized dividend stands at $0.82, reflecting a 0.6% increase from the previous year. Over the past five years, the company has raised its dividend three times, averaging an annual growth of 4.32%. The potential for future dividend growth, however, hinges on earnings growth and the payout ratio, which measures the proportion of earnings paid out as dividends. Invesco's current payout ratio is 49%, meaning it has distributed 49% of its trailing twelve months' EPS as dividends.

For the current fiscal year, Invesco anticipates healthy earnings growth. The Zacks Consensus Estimate for 2025 is projected at $1.85 per share, indicating a year-over-year earnings growth rate of 8.19%.

Bottom Line

Investors appreciate dividends for numerous reasons, from enhancing stock investing profits to reducing overall portfolio risk, and even providing potential tax advantages. However, not all companies offer dividends quarterly.

Established firms with stable profit streams are often viewed as the best candidates for dividends, whereas high-growth companies or tech startups rarely provide dividends to their shareholders. During periods of increasing interest rates, it is crucial for income investors to recognize that high-yield stocks may face challenges. Given these factors, IVZ presents an attractive investment opportunity. It serves not only as a sound dividend stock but also holds a Zacks Rank of 3 (Hold).

Dividends, Investing, Growth