5.6% Dividend Yield During Tax Season
We’re right in the middle of tax season.
Some of you are already done.
You’re the lucky ones!
The rest of us are trying to finish before the April 15 deadline.
If you need some help, one company is available.
And if you need help with dividend income, it’s got you covered there as well.
H&R Block (ticker: HRB) is one of the leading tax preparation companies in the US.
Last year, H&R Block helped file over 22 million tax returns.
And H&R Block is everywhere with over 9,000 locations spread out across the US.
We’re here for the dividend, and H&R Block has a great one.
Its 5.6% dividend yield is the highest it’s been since the COVID crash in 2020.
And a high dividend yield doesn’t mean H&R Block is skipping growing its dividend.
Over the last decade, H&R Block has averaged almost 7% growth in its dividend each year.
The company also has an amazing 34% dividend payout ratio, so there’s plenty of room to keep those dividends growing.
H&R Block’s financials are also incredible.
Over the last 5 years, H&R Block’s revenue grew on average by 14% each year.
Its profit margin of 16% is one of the highest in its industry.
And its forward price-to-earnings ratio, which uses earnings projections for next year, is only 5.2x.
Most companies’ forward price-to-earnings ratios are higher than 15x, so H&R Block’s 5.2x means the stock is extremely cheap.
H&R Block sounds like the perfect dividend company…so what’s the catch?
There are major concerns about artificial intelligence (AI).
AI has the potential to disrupt a lot of industries, and tax preparation is one of them.
AI could move tax preparation more online and cut companies like H&R Block completely out.
H&R Block’s 9,000 physical locations could really weigh the stock down.
Over the past year, H&R Block’s stock price is down almost 50% on worries about AI.
It’s the reason H&R Block’s dividend yield is so high and its forward PE is so low.
H&R Block doesn’t sound like the perfect dividend company anymore.
But we don’t need perfection, and H&R Block is still a great dividend stock.
H&R Block understands the risk of AI and is investing to add AI tools to its products.
In 2023, H&R Block partnered with OpenAI to release AI Tax Assist for its users.
Last month, H&R Block announced improvements to its AI models.
And just last week, CNET, a product-reviewing company, named H&R Block as having the Best Tax Software.
Historically, CNET chose TurboTax, H&R Block’s largest competitor, so the recognition is a big deal.
H&R Block is a little risky.
It’s still unclear how much AI will transform tax preparation.
But there aren’t many companies with 7% dividend growth, and dividend yields approaching 6%.
And if you throw in payout ratios less than 40%, H&R Block is the only company accomplishing all three.
Have you filed your taxes yet?
Michael Jennings, Editor
Dividend Stocks Research
Category: Dividend Stocks To Buy?, Dividend Yield
