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Why Eastman Chemical (EMN) is a Top Dividend Stock for Your Portfolio
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Eastman Chemical in Focus
Eastman Chemical (EMN - Free Report) is headquartered in Kingsport, and is in the Basic Materials sector. The stock has seen a price change of 12.84% since the start of the year. Currently paying a dividend of $0.69 per share, the company has a dividend yield of 2.44%. In comparison, the Chemical - Diversified industry's yield is 1.5%, while the S&P 500's yield is 1.39%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.76 is up 3.4% from last year. In the past five-year period, Eastman Chemical has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.46%. 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. Eastman Chemical's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EMN expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $9.23 per share, with earnings expected to increase 50.08% from the year ago period.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EMN 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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Why Eastman Chemical (EMN) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Eastman Chemical in Focus
Eastman Chemical (EMN - Free Report) is headquartered in Kingsport, and is in the Basic Materials sector. The stock has seen a price change of 12.84% since the start of the year. Currently paying a dividend of $0.69 per share, the company has a dividend yield of 2.44%. In comparison, the Chemical - Diversified industry's yield is 1.5%, while the S&P 500's yield is 1.39%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.76 is up 3.4% from last year. In the past five-year period, Eastman Chemical has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.46%. 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. Eastman Chemical's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EMN expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $9.23 per share, with earnings expected to increase 50.08% from the year ago period.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, EMN 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).