Why Greenbrier Companies is a Great Dividend Stock Right Now

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 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.

Greenbrier Companies in Focus

Headquartered in Lake Oswego, Greenbrier Companies GBX is a Transportation stock that has seen a price change of 12.72% so far this year. Currently paying a dividend of $0.3 per share, the company has a dividend yield of 2.41%. In comparison, the Transportation - Equipment and Leasing industry's yield is 1.75%, while the S&P 500's yield is 1.62%.

In terms of dividend growth, the company's current annualized dividend of $1.20 is up 8.1% from last year. Over the last 5 years, Greenbrier Companies has increased its dividend 2 times on a year-over-year basis for an average annual increase of 2.84%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm'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.

Looking at this fiscal year, GBX expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $4.23 per share, with earnings expected to increase 42.42% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 must be conscious 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 GBX 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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