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Carlyle Group (CG) is a Top Dividend Stock Right Now: Should You Buy?

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Carlyle Group in Focus

Headquartered in Washington, Carlyle Group (CG) is a Finance stock that has seen a price change of 12.53% so far this year. The asset management firm is currently shelling out a dividend of $0.35 per share, with a dividend yield of 3.06%. This compares to the Financial - Investment Funds industry's yield of 4.08% and the S&P 500's yield of 1.6%.

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Looking at dividend growth, the company's current annualized dividend of $1.40 is up 1.8% from last year. Over the last 5 years, Carlyle Group has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.06%. 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. Carlyle's current payout ratio is 43%. This means it paid out 43% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for CG for this fiscal year. The Zacks Consensus Estimate for 2024 is $3.93 per share, which represents a year-over-year growth rate of 21.30%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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, CG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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