FIG Stock: A Top Financial Stock Yielding 6.9%
December 17, 2016
A Top Dividend Stock That Many Investors May Be Unaware Of
If you’re thinking of looking for a top dividend stock, you may be wondering where to start, and you could be overwhelmed before you even begin.
The primary criteria should be that the company pays a dividend yield that is worth your investment. Next is the dividend’s history, followed by the company’s success at running its business in a way that maintains and hopefully grows the dividend over time.
I have done my own research and found that a company fits this criteria: Fortress Investment Group LLC (NYSE:FIG) stock. A company that manages money on behalf of over 1,600 institutional investors and private clients globally and with approximately $70.0 billion in assets under management, Fortress is a top dividend stock. Let me explain why.
First off, FIG stock does pay a dividend, meaning it would be classified as a high-dividend stock. The current yield is 6.98%, based on the trading price of $5.16. FIG stock pays a dividend every quarter and has seen a 50% increase over the past years.
Fortress is a company that has rewarded its shareholders with a rare special dividend not once, but three times. A special dividend is an extra dividend paid to shareholders on top of the regular dividend that is paid to shareholders. In the case of FIG stock, the special dividend has been greater than the regular one; for example, in 2015, the regular dividend was $0.08 per share, while the special dividend was $0.30 per share.
The reason the company has been able to do this is its tremendous growth over time. The assets under management have doubled since 2009 and have grown over 800% over the last 12 years. This supports the thesis of FIG stock being a top dividend stock.
Fundamentals of FIG Stock
Even though there are more assets now, there is debt on the balance sheet as well. However, Fortress Investment Group’s overall debt for FIG stock is very minimal, with a debt-to-capital ratio of 19%. A ratio above 50% means that debt is being used to grow the business. But, in this case, the ratio is below 50%, meaning that the assets and cash flow is being used to grow the business, which is exactly what investors want to see.
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Another metric that makes FIG stock attractive is the forward price-to-earnings (P/E)ratio. For this ratio, the current price is used and divided by what the estimated future earnings are for the next year. This ratio is also used to look at how much is being paid by investors for each dollar of earnings from the company.
FIG stock has a forward P/E ratio of 6.11, in comparison to the S&P 500’s ratio of 22.61. This means that $6.11 is paid for each dollar of Fortress’ earnings, which is only approximately 27% compared to the S&P 500’s $22.61 for each dollar of earnings.
Final Thoughts on FIG Stock
Over the past year, the share price return has been flat and the only return has been the dividend. Therefore, FIG stock could be one for which patient dividend investors are paid to wait until other investors become aware of this investment opportunity.
FIG stock should be considered a top dividend stock, not only because of its high yield, but due to the special payments made in the past as well. As the company continues to grow, there is the possibility of future hikes and more special dividends.
