Some of the world’s best investors stick to dividend portfolios. They know that a steady stream of income is a top wealth building strategy. And finding the best deals is vital. So today, we’re going to review another one of the best dividend stocks around. Let’s take a look at Evercore’s dividend history and safety…
Business Overview and Highlights
Evercore (NYSE: EVR) is a $3.6 billion business. The investment banking advisory firm is based out of New York and it employs 1,700 people. Last year Evercore pulled in $2.1 billion in sales and that works out to $1.2 million per employee.
Evercore’s investment banking business advises its clients on mergers and acquisitions, divestitures, financings, public offerings, and other strategic transactions. The company also does wealth management, institutional asset management, and private equity investing. Notably, Evercore advised Coach on its $2 billion acquisition of Kate Spade New York, Whole Foods on its $14 billion sale to Amazon, and CVS on its acquisition of Aetna. Also, Evercore will be advising Anadarko on its $60 billion sale to Occidental Petroleum this year.
On April 23, 2019, Evercore’s board of directors declared a $0.58 quarterly cash dividend. The dividend is payable June 14 to shareholders of record on May 31.
Evercore’s 10-Year Dividend History
The company paid investors $0.51 per share a decade ago. Over the last 10 years, the dividend has climbed to $1.90. That’s a 273% increase and you can see the annual changes below…
Some of the world’s best investors stick to dividend portfolios. They know that a steady stream of income is a top wealth building strategy. And finding the best deals is vital. So today, we’re going to review another one of the best dividend stocks around. Let’s take a look at Evercore’s dividend history and safety…
The compound annual growth is 14.1% over 10 years… but over the last year, the dividend climbed 33.8%. The increase in dividend growth is a good sign. Evercore might work out as a great income investment. Let’s take a look at the yield…
Current Yield vs. 10-Year Average
Evercore’s long history of paying dividends makes it one of the best dividend stocks around. This also makes the dividend yield a great indicator of value. A higher yield is generally better for buyers. Sustainability is also vital and we’ll look at that soon.
The dividend yield comes in at 2.67% and that’s above the 10-year average of 2.51%. The chart below shows the dividend yield over the last 10 years…
The higher yield shows that investors have bid down the company’s market value. They might be expecting higher growth and payouts. But more often than not, the dividend yield is mean reverting with share price changes.
Improved Dividend Safety Check
Many investors look at the payout ratio to determine dividend safety. They look at the dividend per share divided by the net income per share. So, a payout ratio of 60% would mean that every $1 Evercore earns, it pays investors $0.60.
The payout ratio is a good indicator of dividend safety… but accountants can manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s Evercore payout ratio based on free cash flow over the last 10 years…
The ratio is volatile over the last 10 years and the trend is down. The last year shows a payout ratio of 9.4%. This gives Evercore’s board of directors plenty of flexibility to raise the dividend. Evercore’s dividend looks like a safe bet for dividend investors.
If you’re interested in seeing more dividend research, please comment below. You can also check out our free DRIP calculator. With it, you can uncover the power of dividend reinvestment growth.
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Good investing,
Robert
