3 reasons to buy this attractive high-yield stock now

High yielding dividend stocks come in all shapes and sizes. But one of the most important considerations is whether shareholder payouts can grow over the years – or not.

And I can see many tours with it Moneysupermarket.com (LSE: Money). But to appreciate the beauty of the stock, I have put all notions out of my mind that the company has a high growth business.

Perhaps in the past. But the business is mature. And this one looks more like a cash-cow now with potential for modest growth ahead. But these characteristics should be explored as potential high dividend payers for long-term diversified portfolios.

strong brand

Many will be familiar with the name. The company runs a price comparison site for insurance, money, home services, and other products. And have such brands MoneySuperMarket, MoneySavingExpert, Quidco, Ice lolly, Decision Techand Travel Supermarket.

Direct business model. MONY earns a fixed marketing fee from the product provider when a customer makes a purchase through one of the comparison websites. And the director considered the business “Very measurable”.

However, like all companies, there are some risks for investors. And one is that the sector is quite competitive. Although the company has established and well-known brands to help it maintain its market share. And also keep buying the competition!

But incomes are down in 2020 and 2021. However, the pandemic is making trade difficult for many companies. However, the situation suggests that businesses may be vulnerable to the effects of economic cycles.

Meanwhile, with the share price close to 227p, it is around 45% lower than its peak in the summer of 2019. But over the past year, it has been around 10% lower. So the stock has been volatile. And that may be a negative for some investors.

Reasons to buy

But there are three compelling reasons to buy the stock today. And the first is a stable multi-year dividend record. Shareholder payments increased by a mid-digit percentage every year in 2017, 18 and 19. Directors were held flat in 2020, 21 and 22. But importantly, they did not cut. And City analysts expect low to mid-single digit increases in 2023 and 24.

I think the dividend record reflects the stability of the company’s cash flow. After all, it takes cash to pay dividends. But another reason to buy stocks is a strong balance sheet that shows net cash rather than net debt. And that’s another testament to the quality of the cash-generating company.

However, MONY also shows attractive quality indicators for operating margin and return on equity. But the third reason to buy is the new positive outlook statement posted with full-year results on February 16.

The directors see opportunities for growth ahead. And that optimism is supported by encouraging numbers for 2022. Revenue is up 22% year over year, adjusted earnings per share is up 21% and operating cash flow is up 59%. And strong performance can reduce debt by 38%.

The dividend yield in 2024 is 5.5%. And I think the price looks attractive. Indeed, the stock seems worthy of further research with a view to long-term holding.