Greenbrier Companies Could Be a Great Choice

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

Greenbrier Companies in Focus

Based in Lake Oswego, Greenbrier Companies GBX is in the Transportation sector, and so far this year, shares have seen a price change of 14.96%. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.36%. In comparison, the Transportation - Equipment and Leasing industry's yield is 1.13%, while the S&P 500's yield is 1.59%.

In terms of dividend growth, the company's current annualized dividend of $1.20 is up 8.1% from last year. Greenbrier Companies has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 2.84%. 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, Greenbrier's payout ratio is 31%, which means it paid out 31% of its trailing 12-month EPS as dividend.

GBX is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $4.23 per share, which represents a year-over-year growth rate of 42.42%.

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. However, not all companies offer 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, GBX presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

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