20 1 Payout
Street - The payout will be 11:1 (with a percentage chance of 8.1% in European roulette and 7.9% in American roulette) as you are betting on a row of three numbers (i.e. One way to adapt it using an augmented payout ratio: Augmented Payout Ratio = (Dividends + Buybacks)/ Net Income for the same period Historic data. The data for S&P 500 is taken from a 2006 Eaton Vance post. The payout rate has gradually declined from 90% of operating earnings in 1940s to about 30% in recent years. Annuity Payout or Annual Payment Option: Payment scheme wherein prizes are awarded starting with 1 immediate payment followed by 29 annual payments. These payments are graduated – meaning they increase by 5% each year to account for inflation. See IRM Exhibit 20.1.1-2, Penalty Reason Code Chart, in IRM 20.1.1, Introduction and Penalty Relief, for a complete list of penalty reason codes. The Service will abate the penalty for failure to file or pay when the taxpayer shows that the failure to comply was due to reasonable cause and not due to willful neglect.
Dividend stocks are good investments, but those that grow their payouts are even better. Did you know that if a company raises its payout by 10% each year, it would take a little more than seven years for those dividend payments to be double what they are today? A 20% annual increase is less likely but at that rate, the doubling period would be just four years. And three stocks that recently hiked their payouts by at least 20% include Abbott Laboratories (NYSE: ABT), Nexstar Media (NASDAQ: NXST), and Reliant Bancorp (NASDAQ: RBNC).
1. Abbott Laboratories
Healthcare giant Abbott announced in December 2020 that it would be increasing its dividend payments by a whopping 25%. It's the 49th year in a row that the company has hiked its payouts. One more increase next year, and Abbott will become a Dividend King. With quarterly payments of $0.45, investors are earning a yield of approximately 1.5%. That's right around the S&P 500 average of 1.6%. But it's still a relatively low yield, and that makes it easier for the company to increase its payouts by a large percentage.
The Illinois-based business delivered its fourth quarter results on Jan. 27 and it's no surprise it felt confident raising its payouts by such a large amount. Net sales for the period ending Dec. 31, 2020, totaled $10.7 billion and grew 28.7% from the prior-year period while net earnings of $2.2 billion more than doubled last year's tally.
Of the total sales, Abbott says $2.4 billion was related to COVID-19 diagnostics testing. The company has many tests for the coronavirus and its most popular, BinaxNOW, can produce results within 15 minutes, and the Food and Drug Administration issued an emergency use authorization for it back in August 2020. With COVID-19 not going away just yet, testing could continue to give Abbott's top line a boost for the foreseeable future.
With a payout ratio -- the ratio of total dividends paid to net income -- of around 40%, Abbott has room to continue hiking its payouts but investors shouldn't get too accustomed to 25% increases: last year, the company raised its dividend by a more modest 12.5% which is still on the high side but a lot more reasonable.
2. Nexstar Media
Including its partners, Texas-based Nexstar owns and operates 198 television stations and reaches 68% of all households in the U.S. that have a TV. The media company announced in January that it would also be increasing its dividend payments by 25%. In addition, its Board approved the repurchase of up to $1 billion in common shares. The business credits its strong free cash flow and 'long-standing commitment to enhancing shareholder value' as to why it has made these recent moves.
Gallery: Top Stocks To Watch Heading Into February (GOBankingRates)
These types of increases aren't uncommon for Nexstar as last year it raised its payouts by 24% and in 2019 its dividend payments were 20% higher than the previous year. The company started paying dividends in 2013 at just $0.12 every quarter. Today, it pays nearly six times that amount at $0.70 and yields 2.4%.
Over the trailing 12 months, Nexstar has generated $722 million in free cash flow -- well above the $97 million in dividends it paid out during that time. And its modest payout ratio of 18% also suggests there's plenty of room left for the company to continue making big increases in the future.
3. Reliant Bancorp
Reliant is a Tennessee-based business that operates banking centers within the state. On Jan. 21, the company released its fourth quarter results, and its net income of $12.2 billion for the period ending Dec. 31, 2020, was nearly triple the $4.1 billion in profit it reported a year ago. A key reason for the growth is that the business grew in size in 2020 as the acquisitions of First Advantage Bancorp and Tennessee Community Bank Holdings now give Reliant $3 billion in consolidated assets, up from $1.9 billion at the end of 2019.
A few days after releasing the results, Reliant announced it would be increasing its dividend by 20%.
It's effectively a two-cent hike from $0.10 to $0.12. Last year, it increased its payouts by one cent, or 11% from its 2019 quarterly payments of $0.09. With the most recent increase, Reliant's stock now yields nearly 2.4%. Its payout ratio of 14% is also fairly low, and investors could see more increases in the future, especially as the company has gotten bigger in size.
20 To 1 Odds Payout Calculator
However, with the economy still fragile amid COVID-19, it's by no means a guarantee of how it will do in the near future and that's why investors may need to be a bit more cautious with this dividend stock, especially given its lack of geographical diversification.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
SPONSORED:10 stocks we like better than Abbott Laboratories
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Abbott Laboratories wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of November 20, 2020
Win, Place, Show – How To Bet On Horses
WIN (W) bets require that a horse finishes in 1st place.
PLACE (P) bets require that a horse finishes in 1st or 2nd place.
SHOW (S) bets require that a horse finishes in 1st, 2nd, or 3rd place.
I’m going to use the diagram (of the finish of a race) below to answer some common questions on the Win, Place, Show bets. The Tote-Board Win odds are above each horse in parenthesis.
How do you calculate the expected payout for a Win Bet?
- Win payouts are based on a $2 wager. Multiply the Tote-Board odds times $2 and then add the $2 wager back.
For example, #8 is (7-1), so 7 x $2 = $14, Add $2 = $16 payout.
- To calculate prices for odds other than X-1, simply convert the (fractional) odds to a decimal equivalent and do the same calculation.
For example, odds of (8-5) equals 1.6 x $2 = $3.20, Add $2 = $5.20 payout.
- I always do this mental conversion to decimal equivalents for clarity in my own mind. In fact when I jot down the Tote-Board odds on my sheet they are always in decimal format. For Example:
201 Patient Rights
| Tote-Board | Decimal | Payout |
|---|---|---|
| (9-2) | 4.5 | $11.00 |
| (7-2) | 3.5 | $9.00 |
| (5-2) | 2.5 | $7.00 |
| (9-5) | 1.8 | $5.60 |
| (7-5) | 1.4 | $4.80 |
| (4-5) | 0.8 | $3.60 |
What does it mean to bet a horse “Across the Board?”
This is just a shorthand way for making a Win, Place, and Show bet in equal amounts. For example, if you bet #8 for $2 Across the Board in the above race, your bets would be $2 to Win, $2 to Place, and $2 to Show for a total of $6 wagered.
In this example, a $2 WPS wager on #8 returned $28 ($16w + $7p + $5s).
To continue with the example, the same $2 WPS bet on #6 would have cost $6, but only returned $3 since the Show ticket is the only one cashed.
What happens if I bet a horse to Place and he wins the race?
You get the Place price only. So $2 to Place on #8 returns $7.
Can you calculate the expected Place price based upon the Win odds?
Win, Place, and Show wagers are all placed into separate Pools. So the anticipated Place price cannot be directly calculated based on the Win odds. In addition to that, the Place price is dependent on exactly who the 1st and 2nd place finishers are in the race. For further explanation on this point, keep reading.
Let’s change the order of finish slightly by switching the top two horses #8 and #2.
The former payouts are shown on the left for comparison, and the new payouts are shown on the right.
20-1 Show Payout
Since #2 is now the winner, his payout line is switched to the top of the chart. He pays $12 for a win ticket because his odds are 5-1. Formula (5 x $2) + $2.
Notice that the #8 place price stayed exactly the same ($7), as did the #2 place price ($6). That is because the same two horses finished in the top two positions, just in reverse order.
Now let’s change the order of finish again by pushing the #8 horse back to 3rd place and moving the #6 horse up to 2nd place.
Since #2 remains the winner, his Win price ($12) does not change. However, notice that his place price decreased from $6 to $5. Why? Because more total money was bet on #6 (the new 2nd place horse) to place than on #8 (the former 2nd place horse). This is reasonable, considering that the Win odds on #6 are 3-1, while the Win odds on #8 are 7-1.
Generally the amount of money bet on a horse is proportionate between the Win, Place, and Show pools. The simple reason why the payout is less for Place and Show wagers (compared to Win) is that the payout pool is being divided by two horses for Place and three horses for Show.
You can conclude from this information that your best return from a Place or Show wager generally happens when the favorite(s) does not finish “In The Money” (The Top Three Spots). Unless of course you bet on the favorite, which is another story!
201 Patterson St
There are a lot of opinions on whether or not it’s even wise to make Place and Show bets, as opposed to just Win bets, but we’ll save that topic for a future article.
Select “Get Started” from the menu above for a complete list of articles about Handicapping and Wagering. For example, Racing 101 has several articles about the basics of Horse Racing. And Meet The People has interviews with trainers (e.g. Christophe Clement), Jockeys (e.g. Gary Stevens), and on-track personnel (e.g. Maggie Wolfendale).
By Neal Benoit